The bandwagon is starting to grow, with the two latest calls adding to the one from JP Morgan earlier here. And much like JP Morgan, both Barclays and Morgan Stanley had previously forecast no rate changes by the ECB for the year. And amid the latest developments in the Middle East and higher energy prices, they are revising their respective calls.
Barclays also sees two rate hikes by the ECB now, with the first one to come in April. They then expect the central bank to deliver the second one in June.
As for Morgan Stanley, they are seeing a bit of a later timeline for the ECB rate hikes. The first one is penciled in for June and the next one being in September this year. And much like JP Morgan, they see the ECB pivoting back to rate cuts again at some point next year too:
“Faced with lower growth, we think the ECB will likely cut rates again in June and September 2027 to 2%, bringing rates back to neutral territory.”
At the same time, Morgan Stanley also revises their call for the BOE outlook as well. The firm previously expected the BOE to cut rates twice this year (April and November) but now see the central bank staying on hold throughout the whole of 2026.
This article was written by Justin Low at investinglive.com.
