ECB raises its deposit rate to 2.50 per cent as energy pressure persists
The European Central Bank raised all three key rates by 25 basis points, taking the deposit rate to 2.50 per cent from 16 September. It linked the move to inflation pressure from the Middle East conflict. New projections put 2027 headline inflation at 2.5 per cent and core inflation at 2.6 per cent, while Associated Press reported that economic resilience supported the decision.
Economics & Markets··Night
All three key rates rise by 25 basis points
The European Central Bank's Governing Council raised all three key rates by 25 basis points on 10 September. From 16 September, the deposit rate will be 2.50 per cent, the main refinancing rate 2.65 per cent and the marginal lending rate 2.90 per cent. Associated Press reported that the central bank for the 21-country euro area took the decision at a meeting in Berlin rather than Frankfurt. The increase aims to cool inflation fuelled by higher oil prices, while stronger-than-expected economic activity also supported the rate rise.[1], [2]
Core inflation sits above headline in 2027
Updated ECB staff projections put headline inflation at 3.0 per cent in 2026, 2.5 per cent in 2027 and 2.1 per cent in 2028. The corresponding core rates excluding energy and food are 2.5 per cent, 2.6 per cent and 2.3 per cent. Core inflation therefore remains above the headline measure in 2027. Compared with the June round, the ECB raised its 2027 and 2028 inflation projections, left the 2026 figure unchanged and also lifted the growth path because the euro-area economy proved more resilient than expected.[1]
Conflict adds uncertainty to the outlook
The ECB statement linked the decision to inflation pressure generated by the Middle East conflict and repeated its commitment to return inflation to the 2 per cent target over the medium term. According to Associated Press, President Christine Lagarde said the outlook was highly uncertain, with risks tilted upward for inflation and downward for growth. The institution did not announce a preset path for future steps. It said each meeting would be decided using incoming economic and financial data, the outlook for underlying inflation and the strength of monetary-policy transmission.[1], [2]
Related columns
For more information on this topic, you can read the related columns.
