ECB Hikes Rates to 2.5% Amid Rising Inflation
The European Central Bank raised its deposit rate by 25 basis points to 2.5 percent. This marks the second increase since September 2023. Inflation in the euro area rose to 3.3 percent in August.
The European Central Bank raised its key interest rates by 25 basis points on Thursday. The deposit facility rate now stands at 2.5 percent. This is the second rate hike since September 2023.
The main refinancing operations rate increased to 2.65 percent. The marginal lending facility rate rose to 2.9 percent. The bank cited rising inflationary pressures and high energy prices as drivers for the move.
Inflation Projections Revised Upward
Euro area inflation reached 3.3 percent in August. This is up from 2.9 percent in July. Energy prices drove this increase, rising 14.3 percent annually.
The ECB expects headline inflation to average 3 percent in 2026. The forecast for 2027 was revised up to 2.5 percent. The 2028 projection stands at 2.1 percent. Prices for non-energy items remained stable.
Economic Growth Beats Expectations
The euro area economy grew by 0.4 percent in the second quarter. This figure exceeded market estimates. The bank revised its 2026 growth outlook to 0.9 percent. The 2027 growth projection is now 1.4 percent.
According to GN markets/policy (en-US), the central bank maintains a meeting-by-meeting approach. It offers no forward guidance on the timing of future actions. Officials state they remain ready to adjust policy as needed.
