[Morgan Stanley Expects ECB to Cut Interest Rates to 1.5% in the First Half of Next Year] Morgan Stanley expects the European Central Bank (ECB) to lower its policy rate from the current 2.00% to 1.50% in the first half of next year and maintain that level. Strategists stated that weak economic growth, inflation below expectations, and limited fiscal stimulus are the reasons prompting the ECB to further ease monetary policy. Morgan Stanley also predicts that the yield on 10-year German government bonds will be approximately 2.45% by the end of 2026. According to LSEG data, the money market expects the ECB to cut interest rates by nearly 10 basis points in June 2026.