Morgan Stanley had previously called for the ECB to cuts rates in September and December. But amid recent developments, they are pushing back those expected rate cuts to December and March next year now.

Yesterday, we had stronger PMI results from the euro area especially on the manufacturing side. That reaffirms some resilience in the economy alongside some stubborn price pressures still persisting. The ECB pause through the summer looks well warranted now and even a rate cut in Q4 may not be a given. Markets are currently pricing in just ~9 bps of rate cuts by year-end.