The European Central Bank’s latest Economic Bulletin reviews the Governing Council’s September 10 decision to raise its three key interest rates by 25 basis points as the Middle East conflict sustains energy driven inflation pressures. The deposit facility, main refinancing operations and marginal lending facility rates increased to 2.50%, 2.65% and 2.90%, respectively, from September 16. Staff project headline inflation of 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028, with the forecasts for 2027 and 2028 revised upward from June. The euro area economy has proved more resilient than expected, prompting growth forecasts of 0.9% for 2026, 1.4% for 2027 and 1.5% for 2028, including upward revisions for 2026 and 2027. Inflation risks remain tilted upward and growth risks downward, mainly because further geopolitical disruption could prolong the energy shock and generate broader price and wage effects. The Governing Council will continue to set rates based on incoming data, underlying inflation and monetary policy transmission at each meeting, without committing to a predetermined path.
2026-09-24European Central Bank
European Central Bank bulletin sees inflation above target for an extended period after 25 basis point rate increase
The European Central Bank’s latest bulletin reviews its 25 basis point rate increase and forecasts inflation of 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028. Growth projections were raised for 2026 and 2027 as the euro area economy proved more resilient than expected. Energy and geopolitical risks leave the inflation outlook tilted upward, and the ECB has not committed to a specific rate path.