ECB Hikes Rates Amid Inflation Fears, Euro Stablecoin Holders Left Out

The European Central Bank (ECB) raised its interest rates by 25 basis points to 2.5% on Thursday, citing inflation as a major concern.

According to the ECB, it now expects headline inflation of 3.0% this year, 2.5% in 2027, and 2.1% in 2028, with the Middle East conflict putting pressure on energy prices.

The move takes the deposit facility rate, what banks can earn by parking money overnight with the Eurosystem, to 2.50%, effective September 16.

Despite the interest rate hike, holders of euro stablecoins such as Circle's EURC will still receive zero interest, thanks to a provision in MiCA (Markets in Crypto-Assets) that prohibits issuers and crypto platforms from paying interest or benefits tied to holding periods.