Jens Eisenschmidt: latest market views

Summary

Jens Eisenschmidt is Morgan Stanley's Chief Europe Economist, covering eurozone growth and ECB policy, and spent more than 14 years as an economist at the European Central Bank before joining the firm in 2022.

Chorus has 5 views from Jens Eisenschmidt across 2 episodes on Thoughts on the Market (Morgan Stanley) since October 22, 2026.

What they talk about most

• Europe's economy · 3
• Central banks outside the US · 2

The latest views

Newest first. Every quote is checked against the episode's transcript.

• Central banks outside the US

  ECB will tighten gradually; market prices too many hikes, with one in December and possibly March.

  The ECB was the only major central bank to get inflation back to target and had already cut rates to 2%, which is roughly neutral. Responding to the energy supply shock is therefore easy: it can tighten by moving toward the restrictive end of the neutral range. The policy question is how strong the economy holds up, since that determines how much of today's inflation becomes tomorrow's through wage agreements. Hikes will be gradual rather than aggressive, and since the last call the risks to inflation have stacked up to the upside, with more inflation and resiliency than expected. Eisenschmidt expects one hike in December and says one more in March is possible. Financial tightening at the long end is a restraint that could mean the ECB ends up right without changing its call. He thinks the market is pricing too many hikes. He contrasts the ECB with the Bank of England, which had been restrictive for longer and had more room to wait.

  “I think the market is pricing too many rate hikes. We have one more at this stage in December, and that's it. ...we have seen the tightening at the long end. If that continues, we may very well end up being right with that call without any need to change it.”at 8:20

  Thoughts on the Market (Morgan Stanley): One Global Shock, Different Rate Paths · October 23, 2026

• Europe's economy

  Export demand, including AI-related and German chemicals gains from Hormuz disruption, drove Europe's Q2 growth.

  Eisenschmidt says Europe's second-quarter growth had an export-led element tied to AI-related demand. He says that even Europe is now receiving more orders from customers, since it is usually seen as the higher-cost end of the spectrum. Geopolitical tensions also helped some producers, such as the German chemical industry, which can deliver products that were previously shipped through the Strait of Hormuz. He expects a similar pattern to repeat in the third quarter.

  “There was also an element of geopolitical tensions helping some of those producers say chemical industry in Germany comes to mind that would deliver products that would previously be delivered out of the strait.”at 2:22

  Thoughts on the Market (Morgan Stanley): Economic Roundtable: What’s Keeping Global Growth Going? · October 22, 2026

• Europe's economy

  Persistent high energy prices and above-4% wage growth will squeeze the European consumer, a key downside risk.

  Consumption is about 50% of European spending against about 20% for investment, so it matters more. Eisenschmidt expects wage increases above 4% because European wage setting lags inflation, which is reflected in today's wage agreements. How long that persists depends on energy markets. He says that if you only trust futures curves, the pressure fades quickly, but diesel price paths can make the outlook more pessimistic. He says the consumer will eventually capitulate or need to show some retracement, which makes consumption the number one risk to the forecast.

  “the consumer will just capitulate or at least need to show some signs of retracement.”at 7:09

  Thoughts on the Market (Morgan Stanley): Economic Roundtable: What’s Keeping Global Growth Going? · October 22, 2026

• Europe's economy

  European investment should pick up from here, helped by the AI build-out and the ECB's earlier rate cuts.

  Eisenschmidt says investment has not shown a big revival in aggregate yet, but he expects more investment from here. He links this to the AI build-out and to the cyclical position of the economy. He also notes that the ECB cut rates last year and that rate cuts typically show up in investment demand with a lag. He expects investment to become a larger growth driver relative to consumption, though the size of the shift is uncertain.

  “While investment has so far, in the aggregate at least, not shown any signs of a big revival and if anything this is what we would expect more investment from here.”at 7:23

  Thoughts on the Market (Morgan Stanley): Economic Roundtable: What’s Keeping Global Growth Going? · October 22, 2026

• Central banks outside the US

  Rising long-term rates may tighten euro-area financial conditions too much, a risk for the ECB to manage.

  Eisenschmidt says European monetary policymakers are debating whether long rates have risen too much, which would present a significant tightening of financial conditions. He treats balancing this as a real risk that calls for caution. He lists interest rates or a too-tight monetary policy stance as one of three main risks to the European outlook, alongside energy-driven consumption and the investment cycle.

  “the degree to which long rates have increased maybe too much and present a significant tightening of financial conditions.”at 11:57

  Thoughts on the Market (Morgan Stanley): Economic Roundtable: What’s Keeping Global Growth Going? · October 22, 2026

Shows

• Thoughts on the Market (Morgan Stanley) · 2 episodes