EU inflation concerns mount as markets expect aggressive ECB moves
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Morgan Stanley has upped their guess for the terminal peak rate of the European Central Bank in its latest central bank policy outlook, forecasting that the key interest rate in the eurozone will go up to 4% this year.
Before, they were thinking it would be 3.25%, but they changed their minds because of mounting signs of inflation pressure in the eurozone. This week, we saw a surprising increase in core inflation in 20 eurozone countries. Other banks, like JP Morgan and Deutsche Bank, also revised their predictions and think the ECB rate will go up to 3.75%.
Pierre Wunsch, a member of the ECB's executive board and head of the Belgian central bank, said on Friday that they might even raise the key interest rate to 4% if core inflation stays high.
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