According to a report by Morgan Stanley interest rate strategists Luca Salford and Maria Chiara Russo, ongoing Middle East conflicts, uncertainty around policy normalization, and central banks' initial assessments of a stagflationary environment have led the firm to revise its outlook for monetary policy. Morgan Stanley now anticipates that the European Central Bank will raise interest rates by 50 basis points in June and September 2026, but will reverse those increases in 2027. Data from London Stock Exchange Group indicates that money markets are currently pricing in three rate hikes by the ECB this year. Under their baseline scenario for the ECB’s interest rate trajectory, the strategists also project that the 10-year German government bond yield will reach 2.80% by the end of 2026 and 2.70% by the end of 2027. The 10-year German bond yield closed at 3.038% on Friday, according to LSEG data.
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Morgan Stanley Predicts ECB Rate Hikes in 2026 Followed by Reversal in 2027
Deep News03-23 15:00
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