Just months ago, the European Central Bank was in easing mode. Now it’s preparing to raise rates for the second time, with policymakers actively discussing another 25 basis point increase at their next meeting.
The ECB’s deposit facility rate currently sits at 2.00% after the bank held steady at its April 30 meeting. A hike on June 11 would push it to 2.25%, and a growing consensus suggests September could bring yet another increase. More than 90% of economists surveyed expect the June move, and futures markets have priced in approximately 99% odds of it happening.
From rate cuts to rate hikes in record time
Throughout 2025, the ECB was cutting rates, reducing the deposit facility rate to 2.00% by June 2025 as inflationary pressures eased. The expectation heading into 2026 was continued easing.
Then energy prices happened.
