The ECB’s Governing Council decided to increase all three key interest rates by 25 basis points. As a result, effective from 17 June, the interest rates on the deposit facility, the main refinancing operations, and the marginal lending facility will rise to 2,25 percent, 2,40 percent, and 2,65 percent respectively.
The ECB reiterated its determination to ensure that monetary policy remains appropriately restrictive so that inflation stabilises at its medium-term target of 2 percent.
«The war in the Middle East is creating upward pressure on inflation,» the central bank said in its statement. «The decision to raise interest rates is robust across a range of scenarios illustrating how the shock could evolve and affect the euro area’s medium-term outlook.»
Higher Inflation Forecast
The ECB has revised its baseline inflation forecast upward. It now expects average headline inflation of 3,0 percent this year, compared with 2,6 percent in its March projections. Forecasts for 2027 and 2028 stand at 2,3 percent and 2,0 percent respectively. Core inflation, which excludes energy and food prices, is projected at 2,5 percent this year and next year, easing to 2,2 percent in 2028.
