Analysts divided on ECB path after hold, tightening risks emerge in World Economy News 16/04/2026 The European Central Bank kept interest rates unchanged on Thursday, maintaining its deposit rate at 2% as policymakers navigate heightened uncertainty from the Middle East conflict and its impact on energy prices and inflation. Analysts are divided on whether the central bank will need to raise rates later this year, with several major institutions revising their forecasts following the decision. The ECB’s updated staff projections showed inflation rising to 2.6% in 2026, up from the previous 1.9% estimate, while growth forecasts were cut. President Christine Lagarde emphasized the bank’s data-dependent approach, stating the ECB is “well positioned” to handle the energy shock but stands ready to act if needed. Morgan Stanley Economists led by Jens Eisenschmidt now expect the ECB to raise rates twice this year, with 25 basis point hikes in June and September, bringing the deposit rate to 2.5%. The team then anticipates cuts beginning in June 2027 to return rates to neutral at 2%. Morgan Stanley cited upward inflation revisions and the risk of persistent second-round effects as justification for tightening. The bank’s rates strategy team was stopped out of their long position in short-term euro interest rate futures even before the ECB announcement. UBS Chief Economist Reinhard Cluse and his team maintained their baseline call for rates to remain at 2% through 2026, though they acknowledged the probability of this scenario is declining. UBS presented the decision as reflecting “cautious hawkishness,” noting the ECB will monitor commodity markets, supply bottlenecks, and wage dynamics closely. The bank emphasized that while rate hikes are not yet a done deal, the risks are skewed toward tightening if energy prices remain elevated and second-round effects materialize. Deutsche Bank Chief Economist Mark Wall changed the bank’s ECB call, now expecting rates to rise to 2.5% with hikes in June and September. Deutsche Bank noted that President Lagarde’s calm demeanor should not be misinterpreted as inaction, and the bank’s proprietary AI tool scored the press statement as hawkish at 7 out of 10, the highest since early 2024. The team emphasized this is a highly contingent situation with risks on both sides. J.P. Morgan Rates strategists Francis Diamond and team advised clients not to fade the rate hikes now priced into markets, with around 65 basis points of tightening expected by December. The bank recommended rotating out of a 2-year/10-year conditional bear flattener trade into a 1-year/2-year position, anticipating any ECB reaction will be front-loaded. J.P. Morgan sees events shifting toward their “Prolonged Conflict” scenario, which assumes more persistent energy price pressures. Source: Investing.com 2026-04-16 hellenicshippingnews... window.___gcfg = {lang: 'en-US'}; (function(w, d, s) { function go(){ var js, fjs = d.getElementsByTagName(s)[0], load = function(url, id) { if (d.getElementById(id)) {return;} js = d.createElement(s); js.src = url; js.id = id; fjs.parentNode.insertBefore(js, fjs); }; load('//connect.facebook.net/en/all.js#xfbml=1', 'fbjssdk'); load('https://apis.google.com/js/plusone.js', 'gplus1js'); load('//platform.twitter.com/widgets.js', 'tweetjs'); } if (w.addEventListener) { w.addEventListener("load", go, false); } else if (w.attachEvent) { w.attachEvent("onload",go); } }(window, document, 'script')); tweet Share