Morgan Stanley: Surging energy prices hinder rate cuts, ECB expected to hold steady this year

Golden Ten Data, March 5th — Morgan Stanley became the latest Wall Street brokerage to predict that the European Central Bank will keep interest rates unchanged until 2026, citing inflation risks triggered by Middle East conflicts. The Wall Street brokerage previously expected the European Central Bank to cut rates twice in June and September, but now anticipates that these rate cuts will be postponed until 2027. Last month, Bank of America Global Research canceled its forecast for a rate cut in 2026. Morgan Stanley analysts stated in the report: "Given the recent rise in energy prices, the eurozone inflation rate may rebound above the European Central Bank's target level for the remainder of this year." The analysts added: "By 2027, inflation may fall below the target again, but this depends on a rapid normalization of the energy market."