ECB Raises Rates for Second Time in 2026 Amid Ongoing Inflation Risks

The European Central Bank (ECB) has raised interest rates for the second time in 2026, citing inflation risks. The decision aims to ensure that inflation returns to the target level of 2% in the medium term.

The conflict in the Middle East continues to impact prices, with ECB experts predicting average headline inflation levels of 3% in 2026, 2.5% in 2027, and 2.1% in 2028.

Excluding energy and food prices, the forecast is slightly higher at 2.5% in 2026, 2.6% in 2027, and 2.3% in 2028. The ECB has raised its inflation expectations for 2027 and 2028 compared to previous estimates.

The bank also revised its economic growth forecast, predicting 0.9% growth in 2026, 1.4% in 2027, and 1.5% in 2028. The ECB attributed the increase in growth forecasts to a more resilient than expected eurozone economy.