Morgan Stanley analysts said that after the ECB held rates on Thursday the
central bank is likely to raise rates in September. The ECB reiterated it
remains well placed to respond to the energy-price shock; Morgan Stanley said
this implies the ECB would consider further tightening if energy prices stay
elevated, supporting a gradual policy squeeze. The ECB raised 25bps in June, and
Morgan Stanley says a September hike would be consistent with its view.
