ECB Hikes Rates as Energy Shock Fuels Eurozone Inflation

The European Central Bank (ECB) has raised its deposit facility rate by 25 basis points to 2.50%, its second rate hike of 2026, in response to an energy shock linked to the escalating West Asia conflict that is pushing eurozone inflation above its 2% target.

The ECB also raised its main refinancing rate to 2.65% and marginal lending facility to 2.90%. Its latest projections show inflation averaging 3.0% in 2026, 2.5% in 2027, and 2.1% in 2028, while growth forecasts were revised higher to 0.9% for 2026, 1.4% for 2027, and 1.5% for 2028.

The ECB's decision may have a limited impact on the rupee due to the current pressure of high crude oil prices, which has driven the currency down by 0.38% to ₹95.46 (provisional) per dollar.