ECB Hikes Rates to Combat Ongoing Inflationary Pressures

The European Central Bank (ECB) has raised its key interest rates by 25 basis points, marking its second hike since the US-Iran war began.

In a move widely expected by markets, the ECB cited ongoing inflationary pressures as a major concern, with inflation forecast to remain above its 2% target for an extended period.

The main refinancing rate has been raised to 2.65%, while the deposit rate increased to 2.50%. The ECB's inflation forecasts have also been revised upward, with projections now at 3.0% for 2026, and higher for 2027 and 2028.

The bank's growth forecasts were upgraded to 0.9% for 2026 and 1.4% for 2027, reflecting the euro area economy's greater-than-expected resilience.