European Central Bank increases interest rates by 25 basis points

On June 11, 2026, the European Central Bank (ECB) increased its three key interest rates by 25 basis points, marking its first hike since 2023. The decision follows a rise in Eurozone inflation to 3.2% in May, up from 3.0% in April and 2.6% in March. ECB President Christine Lagarde confirmed the move is a response to inflationary pressures caused by the ongoing war in the Middle East and rising energy costs. Economic forecasts by the Eurosystem suggest inflation will average 3.0% in 2026, 2.3% in 2027, and 2.0% in 2028. Additionally, GDP growth projections were revised downward for 2026 and 2027, now estimated at 0.8% and 1.2% respectively. Analysts and financial markets had largely anticipated this move as a measure to stabilize prices in the medium term. The central bank remains committed to its 2% inflation target despite geopolitical uncertainties. Future policy decisions will continue to be data-dependent, with analysts suggesting potential for further rate adjustments later this year.