Overview
- The Governing Council unanimously approved a 25 basis-point increase that lifts the deposit rate to 2.50%, the main refinancing rate to 2.65% and the marginal lending rate to 2.90%, with the new levels effective 16 September 2026.
- The ECB revised its projections upward, forecasting inflation at 3.0% for 2026, 2.5% in 2027 and 2.1% in 2028 while baseline growth is seen at 0.9% in 2026 and 1.4% in 2027.
- Officials said the war in the Middle East and disruptions around the Strait of Hormuz have driven energy prices and are the main reason inflation will stay above target for an extended period.
- Markets moved quickly: government bond yields rose, the Italian BTP-Bund spread widened to about 85 basis points, and futures now price a meaningful chance of further ECB tightening into mid-2027.
- Households face higher borrowing costs with estimates that a typical new variable-rate mortgage payment will increase roughly €15–€20 per month, and the ECB warned it will decide future moves based on incoming data at each meeting.