The European Central Bank (ECB) Governing Council raised its three key interest rates by 25 basis points, citing inflation pressures from the Middle East conflict and expectations that inflation will remain well above its 2% target for an extended period. The deposit facility rate had been held at 2.00% from September 2025 through April 2026, raised by 25 basis points in June and held in July. Effective 16 September, the deposit facility, main refinancing operations and marginal lending facility rates will rise to 2.50%, 2.65% and 2.90%, respectively, while the asset purchase programme and pandemic emergency purchase programme portfolios will continue declining without reinvestments. ECB staff projected headline inflation at 3.0% in 2026 and 2.1% in 2028, with the 2027 and 2028 forecasts revised higher, while growth is seen at 0.9% in 2026 and 1.5% in 2028 amid greater-than-expected economic resilience. The outlook remains highly uncertain, with upside inflation risks and downside growth risks linked to the energy shock’s intensity, duration and second-round effects. The Governing Council will retain a data-dependent, meeting-by-meeting approach without pre-committing to a rate path and stands ready to adjust all instruments to stabilise inflation and preserve policy transmission.
2026-09-10European Central Bank
European Central Bank Raises Key Interest Rates by 25 Basis Points
The European Central Bank (ECB) raised its three key interest rates by 25 basis points, citing Middle East-related inflation pressures and expectations that inflation will remain above its 2% target for an extended period. Effective 16 September, the deposit facility, main refinancing operations and marginal lending facility rates will rise to 2.50%, 2.65% and 2.90%, respectively, while the ECB retains a data-dependent, meeting-by-meeting approach.