ECB Raises Rates Again Amid Ongoing Inflation Pressures

The European Central Bank (ECB) has raised its three key interest rates by 25 basis points, marking its second rate hike of 2026. This move follows a similar increase in June and is aimed at bringing inflation back to its target of 2% in the medium term.

According to the ECB's statement, the conflict in the Middle East continues to generate inflation pressures, with headline inflation expected to remain well above target for an extended period.

The bank's new staff projections put headline inflation at an average of 3.0% in 2026, 2.5% in 2027, and 2.1% in 2028. For inflation excluding energy and food, the baseline projection stands at 2.5% in 2026, 2.6% in 2027, and 2.3% in 2028.

The ECB has also raised its growth forecasts for the euro area, expecting the economy to expand 0.9% in 2026, 1.4% in 2027, and 1.5% in 2028.