ECB Hikes Rates Amid Euro Area Growth Forecast Upgrade
The European Central Bank (ECB) has raised its key interest rates by 25 basis points in an effort to combat inflationary pressures caused by the Middle East conflict.
The deposit facility rate will now be at 2.5%, the main refinancing operations rate at 2.65%, and the marginal lending facility rate at 2.90%, all effective from September 16, 2026.
ECB policymakers emphasized their commitment to maintaining restrictive monetary conditions until inflation stabilizes at the 2% medium-term objective.
The bank also upgraded its growth forecasts for the euro area, expecting real GDP to grow by 0.9% in 2026, 1.4% in 2027, and 1.5% in 2028, while headline inflation is forecast at 3% in 2026, 2.5% in 2027, and 2.1% in 2028.
The ECB's Asset Purchase Programme and Pandemic Emergency Purchase Programme portfolios are declining as the Eurosystem no longer reinvests maturing principal payments.