ECB Raises Interest Rates Amid Ongoing Inflation Concerns

The European Central Bank (ECB) has raised its three key interest rates by 25 basis points, setting them at 2.50%, 2.65%, and 2.90% for the deposit facility rate, main refinancing operations rate, and marginal lending facility rate respectively. This decision comes as the ECB continues to monitor inflation, which is expected to remain above target for a prolonged period due to the ongoing Middle East conflict.

The new projections from the ECB's staff suggest that headline inflation will average 3% in 2026, 2.5% in 2027, and 2.1% in 2028. The forecast also predicts economic growth rates of 0.9% in 2026, 1.4% in 2027, and 1.5% in 2028.

The ECB emphasizes that the outlook remains characterized by high uncertainty, with risks tilted to the upside for inflation and to the downside for economic growth. The institution is prepared to adjust its monetary policy instruments as necessary to stabilize inflation at its 2% target over the medium term.