European Central Bank hikes key policy rates by 25 bps for first time in nearly 3 years

Frankfurt: The European Central Bank (ECB) has raised key interest rates by 25 basis points, marking its first rate hike in nearly three years as inflationary pressures intensify due to the ongoing Middle East conflict and rising energy prices.

The ECB increased its deposit rate to 2.25 per cent, the refinancing rate to 2.4 per cent, and the marginal lending facility rate to 2.65 per cent. It also revised its inflation forecasts upward, projecting headline inflation at 3.0 per cent in 2026, 2.3 per cent in 2027, and 2.0 per cent in 2028. At the same time, the central bank lowered its economic growth outlook, forecasting growth of 0.8 per cent in 2026, 1.2 per cent in 2027, and 1.5 per cent in 2028. The ECB said higher energy costs, weaker consumer confidence, and pressure on real incomes are weighing on the economy.

Inflation across the 21-member eurozone remains above 3 per cent, well above the ECB’s 2 per cent target. (ANI)

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