Deposit rate raised 25 basis points to 2.50 percent
The European Central Bank has raised its key interest rates by 25 basis points, lifting the deposit facility rate to 2.50 percent. The Governing Council cited persistent inflation pressures driven by conflict in the Middle East.
Projections revised upward across the board
With effect from September 16, 2026, the deposit facility rate increases to 2.50 percent, the main refinancing rate to 2.65 percent, and the marginal lending facility to 2.90 percent.
New staff projections see headline inflation averaging 3.0 percent in 2026, 2.5 percent in 2027, and 2.1 percent in 2028.
The baseline for core inflation, excluding energy and food, stands at 2.5 percent in 2026, 2.6 percent in 2027, and 2.3 percent in 2028.
Inflation projections for 2027 and 2028 were revised upward compared with June.
Economic growth is projected at 0.9 percent for 2026, 1.4 percent for 2027, and 1.5 percent for 2028, reflecting euro area resilience despite ongoing geopolitical risks.
Navigating the Middle East energy shock
Staff scenarios highlight substantial uncertainty around how growth and inflation evolve under varying assumptions regarding the energy shock caused by the Middle East conflict.
The Governing Council reaffirmed its data-dependent, meeting-by-meeting stance without pre-committing to any rate path.
Meanwhile, the asset purchase programme and pandemic emergency purchase programme portfolios continue to run off predictably, and the Transmission Protection Instrument stands ready against fragmentation.
A defensive response to supply shocks
By lifting rates into an external energy shock, the ECB prioritizes inflation credibility over near-term growth support.
Upward revisions for 2027 and 2028 show policymakers fear second-round effects taking root in wages and services.
Retaining full meeting-by-meeting flexibility prevents overtightening if regional conflict pressures subside.
Source: Monetary policy decisions
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