The European Central Bank just hit the brakes. After holding rates steady for over two years, the ECB raised its key interest rates by 25 basis points on June 11, marking the first hike since 2023 and a clear signal that the era of easy money in the eurozone is, at minimum, pausing for a reality check.
The deposit facility rate now sits at 2.25%, up from 2.00%. The main refinancing operations rate moved to 2.40%, and the marginal lending facility rate climbed to 2.65%.
Why the ECB moved now
The short answer: inflation isn’t cooperating. Euro area consumer prices rose 3.2% year-over-year in May 2026, blowing past the ECB’s 2% target by a wide margin.
The culprit is energy. Geopolitical tensions, particularly the ongoing conflict in Iran and disruptions to shipping through the Strait of Hormuz, have sent energy prices surging across Europe.
