Morgan Stanley Sees ECB Rates Peaking at 4% on Core Inflation

Economists at Morgan Stanley raised their forecast for the European Central Bank’s key interest rate to 4% because core inflation is likely to peak later and higher than previously expected.

The bank increased its forecast for the so-called terminal rate from 3.25% previously, according to a research note. The ECB is set to increase its key rate by 50 basis points at each of the next two meetings before slowing to 25 basis-point pace after that.