ECB raises interest rates by 25 basis points amid inflation pressures

The Governing Council of the European Central Bank (ECB) has decided to raise the three key interest rates by 25 basis points, effective from September 16, 2026. The new rates are 2.50% for the deposit facility, 2.65% for the main refinancing operations, and 2.90% for the marginal lending facility.

This decision is driven by ongoing inflation pressures, partly due to the conflict in the Middle East, which is expected to keep inflation well above the 2% target for an extended period. The ECB’s baseline projections estimate headline inflation at 3.0% in 2026, 2.5% in 2027, and 2.1% in 2028. Excluding energy and food, inflation is projected at 2.5%, 2.6%, and 2.3% respectively for these years.

The economic growth outlook has been revised upward to 0.9% in 2026, 1.4% in 2027, and 1.5% in 2028, mainly due to the resilience of the euro area economy. The outlook remains uncertain, with upside risks to inflation and downside risks to growth, influenced by energy shocks and their effects.

The ECB will continue to follow a data-dependent, meeting-by-meeting approach to monetary policy, assessing inflation and economic risks without pre-committing to a specific rate path. The asset purchase programmes (APP and PEPP) are gradually declining as principal payments from maturing securities are no longer reinvested.

The Governing Council is prepared to adjust all instruments within its mandate to ensure inflation stabilizes at 2% and to maintain effective monetary policy transmission. The Transmission Protection Instrument remains available to counter disorderly market dynamics threatening policy transmission across the euro area.

The ECB President will provide further comments during a press conference starting at 14:45 CET today.