European Central Bank raises interest rates by 0.25% amid regional conflicts

On June 11, 2026, the European Central Bank (ECB) Governing Council unanimously decided to increase its three key interest rates by 0.25 percentage points. This move, the first rate hike since 2023, aims to curb inflationary pressures exacerbated by the war in the Middle East and rising energy costs. ECB President Christine Lagarde stated that the decision was based on various economic scenarios to ensure inflation stabilizes at the 2% target in the medium term. Updated ECB projections indicate headline inflation is expected to reach 3.0% in 2026, 2.3% in 2027, and 2.0% in 2028. Economic growth forecasts were revised downward for 2026 and 2027, reflecting the impact of the conflict on commodity markets, household incomes, and consumer confidence. Despite these headwinds, the ECB expects the economy to maintain resilience, supported by business investment in digital technology and public spending. Analysts noted that the inflation rate in the eurozone rose to 3.2% in May 2026, up from 3% in April.