Morgan Stanley: Inflation is Falling Slowly, Raising the ECB Terminal Interest Rate Forecast to 4%

Morgan Stanley raised its forecast for the ECB‘s terminal interest rate to 4% on Monday after euro zone inflation data for June showed underlying inflation fell only slightly.
The bank had expected the ECB’s key interest rate to peak at 3.75% after a 25 basis point hike in July.
Morgan Stanley said: “Our rate forecasts for the ECB are in light of our updated inflation forecast following the release of the June inflation data and also taking into account the latest comments from policymakers at the ECB’s annual forum in Sintra. Adjustments were made and the terminal rate is now expected to be 4 percent.”