ECB Hikes Rates Again as Inflation Projections Revised Higher

The European Central Bank (ECB) raised its three main interest rates by 25 basis points, as widely expected. This is the second rate hike this year, and it follows a similar increase in June.

In its latest economic projections, the ECB forecasted that GDP growth will be higher than previously anticipated, reaching 0.9% in 2026 and 1.4% in 2027. The inflation revisions were more significant, with headline inflation projected to reach 2.5% in 2027 and 2.1% in 2028.

The ECB emphasized that it stands ready to adjust all instruments within its mandate to ensure inflation stabilizes at 2% in the medium term. The central bank also noted that it is not pre-committed to any specific path, leaving room for further rate adjustments as needed.