The European Central Bank raised its three key interest rates by 25 basis points, its first increase since 2023, in a move to ward off inflationary pressures generated by the US-Iran war.
Effective 17 June 2026, the deposit facility rate rises to 2.25%, the main refinancing rate to 2.40% and the marginal lending rate to 2.65%.
Inflation pressure
Euro area inflation accelerated to 3.2% in May, well above the ECB's 2% target, while core inflation rose to 2.5% from 2.2% in April. The Governing Council said the rate decision was "robust across a range of scenarios" mapping how the energy shock might evolve.
Growth trimmed
New Eurosystem staff projections see headline inflation averaging 3.0% in 2026, 2.3% in 2027 and 2.0% in 2028. The ECB slightly lowered its GDP forecasts, to 0.8% in 2026 (from 0.9%) and 1.2% in 2027 (from 1.3%).
Sources: European Central Bank, CNBC, Euronews.