The European Central Bank raised its three key interest rates by 25 basis points on September 10, bringing the main refinancing operations rate to 2.65% and the deposit facility rate to 2.50%. The marginal lending facility rate now sits at 2.90%, with all changes set to take effect on September 16.
This marks the ECB’s second rate hike of 2026, following a similar 25 basis point increase in June and a pause in July.
What’s driving the hike
Ongoing conflict in the Middle East has pushed energy prices higher, keeping inflation stubbornly above the ECB’s 2% target. ECB staff now project headline inflation to average 3.0% for 2026, with core inflation expected to come in at 2.5%.
The inflation outlook does improve further out. ECB projections put headline inflation at 2.5% in 2027 and 2.1% in 2028, gradually converging back toward the 2% goal.
