The Bank also lifted its inflation outlook for this year to 3% and lowered its growth forecast to 0.8%
The European Central Bank (ECB) has raised interest rates for the first time in almost three years, in a bid to curb the surge in prices sparked by the US-Israeli war with Iran.
Thursday’s decision, which was widely expected by investors and analysts, brings the ECB’s key rate from 2% to 2.25%. It marks the ECB’s first rate hike since September 2023, when the bank’s deposit facility rate peaked at a record high of 4%. The Governing Council, the bank’s main decision-making body, had held rates steady since June 2025.
“The war in the Middle East is generating inflation pressures, and the decision to raise rates is robust across a range of scenarios mapping out how the shock might evolve and affect the medium-term outlook for the euro area,” the ECB said in a statement.
The euro remained broadly stable against the dollar following the decision, trading at around $1.1538.
