The European Central Bank raised its three key interest rates by 25 basis points, effective September 16, 2026. The deposit facility rate will stand at 2.50%, the main refinancing rate at 2.65%, and the marginal lending rate at 2.90%.
In its statement on Thursday, the ECB said the decision underscores the council's resolve to shape monetary policy so that inflation stabilizes at its 2% medium-term target. The Middle East conflict continues to generate inflationary pressure, and inflation is expected to remain "significantly above" the target for an extended period, the bank stated.
For 2026, ECB economists project average total inflation at 3.0%. That should fall to 2.5% in 2027 and 2.1% in 2028. Core inflation — excluding energy and food — is forecast at 2.5% for this year, 2.6% in 2027 and 2.3% in 2028. These outlooks mark slight upward revisions compared with the June projections.
The growth forecast was also lifted. The ECB now expects euro-area GDP to expand 0.9% in 2026, 1.4% in 2027 and 1.5% in 2028. "This mainly reflects the greater resilience of the euro area economy than anticipated," the central bank wrote.
Uncertainty remains high. Inflation risks are skewed to the upside, while growth risks are tilted downside.
On the energy front, the ECB published updated scenarios illustrating a broad range of possible outcomes, accounting for different assumptions about the intensity and duration of the energy shock as well as its indirect and second-round effects.
The update follows market expectation that the ECB would deliver a measured quarter-point increase to keep pace with lingering price pressures even as the regional economy showed surprising durability.
