European Central Bank Raises Three Key Interest Rates by 25 Basis Points
The bank raised deposit, refinancing, and marginal lending rates, announcing that the new rates will take effect on September 16, 2026.
The European Central Bank has decided to increase its three key interest rates by 25 basis points due to inflationary pressures caused by the conflict in the Middle East.
Interest Rates Increased
In line with the decision made by the European Central Bank, the three key interest rates were increased by 25 basis points.
With this increase, the deposit facility rate rose to 2.50 percent, the main refinancing operations rate to 2.65 percent, and the marginal lending facility rate to 2.90 percent.
Effective Date and Rationale for the Decision
It was officially announced that the newly determined rates will be effective starting September 16, 2026.
It was reported that the conflict in Middle East continues to create inflationary pressures and that inflation is expected to remain well above target for an extended period.
Inflation Projections Revised
Headline inflation is expected to average 3.0 percent in 2026, 2.5 percent in 2027, and 2.1 percent in 2028.
Compared to the June projections, the forecast for 2026 was kept unchanged, while the inflation forecasts for 2027 and 2028 were revised upward.
Economic Growth Expectations
Growth projections were updated upward thanks to the Eurozone economy proving more resilient than previously estimated.
Accordingly, the regional economy is projected to grow by 0.9 percent in 2026, 1.4 percent in 2027, and 1.5 percent in 2028.
Asset Purchase Programs Shrinking
The shrinking process of the Asset Purchase Programme and Pandemic Emergency Purchase Programme portfolios continues at a measured and predictable pace.
It was stated that this contraction is occurring because principal payments from maturing securities are no longer being reinvested.