ECB hikes rates by 25 bps for first time in nearly 3 years

ANI Frankfurt [Germany]

The European Central Bank (ECB) hiked key interest rates for the first time in nearly three years, responding to inflation pressures emanating from the Middle East conflict.

The ECB raised all three key interest rates by 25 basis points on Thursday, taking the deposit facility to 2.25%, refinancing rate to 2.4% and marginal lending facility to 2.65%. The bank also raised its inflation projections for 2026–27 owing to a higher path for energy prices which could feed into food, goods and services inflation, the central bank said.  

"In the baseline of the new Eurosystem staff projections, headline inflation is expected to average 3.0% in 2026, 2.3% in 2027 and 2.0% in 2028. For inflation excluding energy and food, the baseline foresees an average of 2.5% in 2026 and 2027 and 2.2% in 2028," the bank said in a release.

The rate hike comes even as concerns around growth linger with rising prices posing a challenge for households. Inflation in the 21-country currency bloc is above 3%, beyond the monetary authority's target of 2%.  

The economic growth projections have also been revised downwards for 2026 and 2027.