The European Central Bank just shifted gears. After a prolonged easing cycle that defined most of 2024 and 2025, the ECB announced a 25 basis point rate hike on June 11, marking its first increase since 2023.
The new deposit facility rate sits at 2.25%, up from 2.00%. The main refinancing operations rate climbed to 2.40%, and the marginal lending facility now stands at 2.65%. All three take effect on June 17.
The culprit here is familiar: inflation, this time fueled by an energy price surge tied to the ongoing conflict in Iran and disruptions to oil shipments through the Strait of Hormuz.
Why now, and why this size
The 25 basis point move was about as surprising as sunrise. Financial markets had priced in nearly 100% probability of the hike before the official decision dropped.
