The European Central Bank is gearing up for another interest rate hike at its September 10 meeting, a move that would push the deposit facility rate to 2.5% and mark the second increase in a tightening cycle. Just months ago, the ECB was still cutting rates.
From cuts to hikes in a matter of months
Back in April 2026, the ECB lowered its deposit facility rate to 2.00%, continuing a pattern of easing. Then energy prices started climbing, driven in large part by geopolitical conflict in Iran, and the inflation picture changed fast.
By June 17, the ECB reversed course with a 25 basis point hike, bringing the deposit rate to 2.25%. ECB President Christine Lagarde emphasized the need for “policy flexibility” in addressing ongoing supply shocks.
A Bloomberg survey conducted on July 17 pointed to the ECB holding steady at its July 23 meeting before delivering another 25 basis point increase in September. A Reuters poll from early June found that over 60% of economists anticipated at least one more rate hike in 2026.
