ECB Hikes Interest Rates Amid Ongoing Inflation Pressures

The European Central Bank (ECB) has raised its key interest rates to combat ongoing inflation pressures fueled by the Middle East conflict. The bank increased its three key interest rates by 25 basis points, taking effect on September 16, 2026.

The interest rates on the deposit facility, main refinancing operations, and marginal lending facility will rise to 2.5%, 2.65%, and 2.90% respectively.

The ECB emphasized its commitment to setting monetary policy to ensure that inflation stabilizes at its 2% medium-term target. However, it noted that price growth is likely to remain well above this level for an extended period.

In its latest projections, the ECB staff expect headline inflation to average 3% in 2026, 2.5% in 2027, and 2.1% in 2028. Core inflation, which excludes volatile energy and food prices, is forecast at 2.5% in 2026, 2.6% in 2027, and 2.3% in 2028.