Morgan Stanley, one of the world’s leading investment banking institutions, changed its expectations for the Eurozone. The Bank revised upwards its forecast for the highest interest rate to be implemented by the European Central Bank, ECB, after the inflation data received last Friday.
Morgan Stanley experts had expected the ECB interest rate to peak at 3.75% by July in their previous forecast reports. However, according to the new report updated today, funding rates may rise up to 4%.
Analysts cited macroeconomic data and the latest statements of officials for their changed interest rate expectations.
Morgan Stanley
We reviewed inflation data and comments from officials speaking in Sintra this week. As a result, we decided to move our ECB final interest rate expectation from 3.75% to 4%.
Inflation Slows in Europe
The figures announced by Eurostat last week show that inflation continues to fall in the region. Sharing its forecast for the Eurozone, the institution determined the average inflation of 20 countries as 5.5%. After the 6.1% figure recorded in May, while the decline continues in most countries, according to the forecasts, inflation in Germany is moving up again.
Speaking last week, regional central bank officials pointed to the continuation of interest rate hikes in line with the 2% target. While the pressure caused by the service sector in the region continues, the decrease in energy prices pulls the inflation down.
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