ECB Raises Deposit Rate to 2.50% Amid Revised Inflation Forecasts

The European Central Bank (ECB) raised its deposit rate by 25 basis points to 2.50% on September 10, marking the second hike in 2026.

This move was accompanied by revised inflation forecasts for 2027 and 2028, with headline inflation expected to average 3.0% in 2026, 2.5% in 2027, and 2.1% in 2028.

The ECB also upgraded growth projections, with euro area GDP now expected to expand 0.9% in 2026, 1.4% in 2027, and 1.5% in 2028.

Despite the rate hike, EUR/USD barely responded, slipping below 1.1600 after the announcement but recovering into the New York close and holding near 1.1610 in early Asian trading on September 11.

The muted reaction was largely due to the dollar's response to US producer prices rising 0.4% in August and the Federal Reserve's upcoming decision on September 16.