ECB raises key interest rates by 25bps

June 12, 2026 (MLN): The European Central Bank raised its three key interest rates by 25 basis points, citing inflation pressures stemming from the war in the Middle East, as it revised up its inflation outlook while cutting growth forecasts for the euro area.

The Governing Council, , set the deposit facility rate at 2.25%, the main refinancing operations rate at 2.40%, and the marginal lending facility rate at 2.65%, effective June 17, 2026, according to a press release issued by the bank.

New Eurosystem staff projections now see headline inflation averaging 3.0% in 2026, 2.3% in 2027, and 2.0% in 2028 revised upward for 2026 and 2027 compared with March forecasts, largely driven by a higher energy price path feeding into food, goods, and services inflation.

Core inflation, excluding energy and food, is projected at 2.5% in both 2026 and 2027, easing to 2.2% in 2028.

On growth, the ECB now expects the euro area economy to expand 0.8% in 2026, 1.2% in 2027, and 1.5% in 2028, a downward revision for 2026 and 2027, reflecting the war's broader impact on commodity markets, real incomes, and confidence.

The Governing Council stressed that the outlook remains uncertain, with upside risks to inflation and downside risks to growth depending on the intensity and duration of the energy price shock and the scale of its second-round effects.

The ECB said it would follow a data-dependent, meeting-by-meeting approach to future rate decisions and stressed it was not pre-committing to any particular rate path.

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