Overview
- The ECB raised its three key rates by 25 basis points on Thursday, moving the deposit facility to 2.50%, the main refinancing rate to 2.65%, and the marginal lending facility to 2.90%.
- The bank published updated staff forecasts that lift near-term inflation and nudge the return to the 2% target into 2028 while modestly raising growth projections for 2026 and 2027.
- Officials framed the decision as meeting-by-meeting and data dependent, saying they will judge future moves on incoming inflation, energy and wage data rather than following a preset path.
- Markets reacted with higher euro‑zone government bond yields and a softer euro, and households, firms and governments now face higher borrowing costs for mortgages, loans and debt rollovers.
- The move is the ECB's second increase since the Iran conflict began, reflecting how disruptions to energy supplies transmit quickly into eurozone prices and raising the risk that energy shocks could spill into wages and core inflation.