European Central Bank increases interest rates by 25 basis points

On Thursday, September 10, 2026, the European Central Bank (ECB) announced a 25 basis point increase across its three primary interest rates to combat persistent inflationary pressures. Effective September 16, the deposit facility rate will rise to 2.50%, the main refinancing operations rate to 2.65%, and the marginal lending facility rate to 2.90%. This marks the second rate hike of the year, following the June increase, as the Governing Council seeks to stabilize inflation toward its 2% medium-term target.

The decision is primarily driven by escalating energy costs resulting from the conflict between the United States and Iran, which has pushed oil prices above $100 per barrel. Experts note that geopolitical instability has led to a significant upward trend in inflation, which rose to 3.3% in August. ECB officials warn that inflationary pressures will remain above target for a prolonged period, with forecasts for 2027 and 2028 being revised upward. Central Bank of Cyprus Governor Christodoulos Patsalides confirmed the necessity of this move, citing the ongoing energy shock. While the economy has shown resilience, analysts expect further rate adjustments later this year to mitigate the impact of the conflict on eurozone price stability.