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Morgan Stanley raises ECB's terminal rate forecast to 4%

Published 03/07/2023, 07:28
Updated 03/07/2023, 12:26
© Reuters. FILE PHOTO: The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo
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(Reuters) - Morgan Stanley (NYSE:MS) on Friday raised its forecast for the European Central Bank's (ECB) terminal rate to 4% after June inflation data for the euro zone showed only the smallest drop in underlying inflation.

The bank previously expected ECB's main interest rate would peak at 3.75%, following an expected 25 basis points hike in July.

© Reuters. FILE PHOTO: The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo

"After updating our inflation forecast with the June data, and taking stock of recent commentary from policymakers at this week's ECB Forum on Central Banking in Sintra, we change our ECB call and now see a terminal rate of 4%," Morgan Stanley said.

(This story has been refiled to correct the day to Friday, not Monday, in paragraph 1)

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