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Morgan Stanley Raises ECB Terminal Rate Forecast to 4%

Morgan Stanley, a Wall Street bank, raised its forecast for the European Central Bank's (ECB) terminal rate to 4% due to inflationary pressures in the eurozone.

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Inflationary Pressures Drive Morgan Stanley's Revised Forecast

"Following material revisions to our inflation forecast, we now expect the ECB's terminal rate at 4%," the bank wrote in a research note. The move follows similar revisions by other leading investment banks, including JP Morgan and Deutsche Bank, driven by the recent rise in underlying inflation across the 20-nation eurozone.

ECB Governing Council Member Supports Potential 4% Rate Hike

On Friday, ECB governing council member and Belgian national bank governor Pierre Wunsch stated that the ECB might consider raising its key interest rate to 4% if underlying inflation in the eurozone remains persistently high.