ECB raises interest rates by 25 basis points amid geopolitical tensions

On September 10, 2026, the European Central Bank (ECB) announced a 25-basis-point increase in its three key interest rates to combat rising inflation. Effective September 16, 2026, 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 in 2026, following a similar move in June, as the bank seeks to align inflation with its medium-term 2% target.

The decision comes in response to renewed inflationary pressures exacerbated by the escalating conflict between the United States and Iran, which has driven Brent crude oil prices above $100 per barrel. Annual inflation in the Eurozone rose from 2.8% in June to 3.3% in August. The ECB has revised its inflation projections, anticipating averages of 3.0% for 2026, 2.5% for 2027, and 2.1% for 2028. Analysts suggest that further rate increases may follow later this year if price trends do not stabilize, which would continue to increase borrowing costs for businesses and households.

Moving forward, the ECB maintains a commitment to data-dependent monetary policy to ensure price stability. While the bank expects inflation to remain above target for a prolonged period, officials aim to guide it back toward the 2% goal by the second half of 2027.