ECB Hikes Interest Rates by 25 Basis Points Amid Persisting Inflation Pressures
The European Central Bank (ECB) has raised its key interest rates by 25 basis points to combat persistently high inflation in the euro area. The rate hike brings the deposit facility rate to 2.50%, the main refinancing operations rate to 2.65%, and the marginal lending facility rate to 2.90%. This move takes effect from September 16, 2026.
The ECB's decision comes as inflation remains above its target of 2% medium-term target. The bank's staff projections show headline inflation averaging 3.0% in 2026, 2.5% in 2027, and 2.1% in 2028. Core inflation is projected to rise to 2.5% in 2027 and 2.3% in 2028.
The ECB notes that the outlook remains highly uncertain due to upside risks to inflation and downside risks to growth. The bank will continue to set policy on a data-dependent, meeting-by-meeting basis, taking into account incoming economic and financial data, underlying inflation dynamics, and the strength of monetary policy transmission.