ECB Hikes Rates Again Amid Ongoing Inflation Concerns

The European Central Bank (ECB) has raised interest rates for the second time this year as it continues to battle stubborn inflation. The Governing Council approved a 25 basis point increase across all three key interest rates, bringing them in line with market expectations and borrowers' fears.

The deposit facility rate now sits at 2.50%, the main refinancing operations rate at 2.65%, and the marginal lending facility rate at 2.90%. These changes will take effect on September 16, 2026.

Despite the rate hike, inflation remains a concern for the ECB, with staff projections showing that headline inflation is expected to average 3.0% across 2026, unchanged from the previous forecast. Core inflation, which strips out energy and food components, is also projected to remain high at 2.5% in 2026.

The ongoing Middle East conflict has disrupted energy markets, with Brent crude prices trading above $100 per barrel. This has put pressure on the ECB to maintain a data-dependent strategy and take further action if necessary.