Morgan Stanley Previews This Week's ECB Policy Decision, Eurozone Inflation

BY MT Newswires | ECONOMIC | 10/28/25 08:59 AM EDT

08:59 AM EDT, 10/28/2025 (MT Newswires) -- Morgan Stanley said it expects the European Central Bank to remain on hold at Thursday's policy meeting, and to stick to its "good place" narrative.

The communication should remain unchanged, stressing data dependency and a meeting-by-meeting approach, noted the bank.

Morgan Stanley sees on Friday eurozone headline HICP at 2.1% year over year in October from 2.2%, with core only 2bps down but rounding at 2.3% year over year from 2.4$. Softer headline comes from energy (-0.9% year over year from -0.4%) and food (2.7% year over year from 3.0%) inflation.

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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