2.50%, 2.65%, 2.90%. Those are the European Central Bank’s new deposit, main refinancing and marginal lending rates, each raised by 25 basis points on Thursday, Sept. 10, and effective Sept. 16.
The Governing Council blamed the conflict in the Middle East, which it said keeps generating inflation pressure in the euro area. It expects inflation to stay well above its 2% target for an extended period, and says the hike shows it is committed to bringing prices back to that level over the medium term.
The projections
ECB staff see headline inflation averaging 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028. Excluding energy and food, the figures are 2.5%, 2.6% and 2.3%. Against June’s forecasts, the 2026 number is unchanged, but 2027 and 2028 were revised up.
Growth looks better than expected. Staff project GDP growth of 0.9% in 2026, 1.4% in 2027 and 1.5% in 2028. The 2026 and 2027 figures were both raised, mainly because the euro area economy has held up better than anticipated. The outlook is still highly uncertain, with risks tilted up for inflation and down for growth.
On the energy shock, staff published scenarios showing a wide range of outcomes, depending on how intense and how long it proves and on indirect and second-round effects.
No promises on the next move
The Council made no commitment on where rates go from here. It will decide meeting by meeting, using incoming data, the inflation outlook and its risks, underlying inflation and how well policy is passing through to the economy.
It also said its asset purchase and pandemic emergency purchase portfolios are shrinking at a measured, predictable pace, since the Eurosystem no longer reinvests the principal from maturing securities. The Council said it stands ready to adjust all its tools to hold inflation at 2% and keep policy transmission working. President Christine Lagarde explained the decisions at a press conference the same day.
