Business & Markets
ECB lifts deposit rate to 2.5% as energy inflation bites
The second rate increase of 2026 takes effect September 16, while policymakers retained a meeting-by-meeting approach and offered no preset path.
Executive summary
- The decision: The ECB raised each of its three key interest rates by 25 basis points, taking the deposit facility rate to 2.50% from September 16.[1][2][3]
- The inflation signal: Euro-area inflation reached 3.3% in August as energy inflation accelerated to 14.3%, according to the ECB's policy statement.[4][2][3]
- The projections: ECB staff forecast headline inflation averaging 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028.[1][4][2]
- The path ahead: Policymakers said decisions will remain data-dependent and meeting by meeting, with no commitment to a particular rate path.[1][4][2][3]
The European Central Bank raised all three of its key interest rates by 25 basis points Thursday, lifting the deposit facility rate to 2.50%, the main refinancing rate to 2.65% and the marginal lending rate to 2.90%. The new rates take effect September 16.[1][2][3]
It was the ECB's second increase this year after a June move and a pause in July. The central bank said the Middle East conflict continues to generate inflation pressure and expects inflation to remain above its 2% target for an extended period.[1][2][3]
Headline inflation in the 21-country euro area rose to 3.3% in August from 2.9% in July. Energy inflation accelerated to 14.3% from 10.3%, while inflation excluding energy and food edged down to 2.4% from 2.5%, underscoring the energy shock at the center of the decision.[4][2][3]
The ECB's baseline projections put headline inflation at 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028. Its growth forecasts are 0.9% for 2026, 1.4% for 2027 and 1.5% for 2028, with the first two years revised upward as the economy proved more resilient than expected.[1][4][2]
President Christine Lagarde said inflation risks remain tilted upward while risks to growth point downward. The bank highlighted the possibility that renewed energy-supply disruptions or a cold winter with low gas storage could intensify price pressure.[4][2][3]
The Governing Council did not signal another move. It said future decisions will depend on incoming data, underlying inflation and the transmission of monetary policy, and that it is not committing to a preset rate path.[1][4][2][3]