Ecb raises rates 25 basis points to 2.25%, 2.40%, 2.65%
ecb raised its three key interest rates by 25 basis points on 17 June 2026, lifting the deposit facility to 2.25%, main refinancing operations to 2.40% and the marginal lending facility to 2.65%. The Governing Council said it is acting to keep inflation anchored at its 2% target in the medium term. For borrowers across the euro area, the move tightens funding conditions immediately.
2.25% deposit facility
2.25% is the new rate on the deposit facility, effective from 17 June 2026, and it sits alongside 2.40% for main refinancing operations and 2.65% for the marginal lending facility. Those three rates set the cost of short-term money in the euro area and influence what banks pay to fund themselves and what households and companies eventually face on credit.
25 basis points was the size of the increase, and the Governing Council said the step is consistent with a data-dependent and meeting-by-meeting approach. It also said it is not pre-committing to any particular rate path, which leaves each future decision tied to incoming economic and financial data, underlying inflation dynamics and the strength of monetary policy transmission.
Inflation at 3.0% in 2026
3.0% is the ECB staff baseline for headline inflation in 2026, with inflation expected to average 2.3% in 2027 and 2.0% in 2028. Inflation excluding energy and food is projected at 2.5% in 2026, 2.5% in 2027 and 2.2% in 2028. The council said staff revised up the 2026 and 2027 inflation projections compared with March because of a higher path for energy prices.
2% is still the medium-term target, but the forecast path shows the ECB expects price pressure to stay above that mark for another year before easing back. The war in the Middle East is generating inflation pressures, and the council said the rate decision is robust across a range of scenarios mapping how that shock might evolve and affect the euro area outlook.
Growth revised down
0.8% is the baseline growth outlook for 2026, followed by 1.2% in 2027 and 1.5% in 2028. The council said the growth outlook was revised down for 2026 and 2027, showing that the tighter inflation fight is landing in an economy that is still not set for strong expansion.
Measured and predictable reductions in the APP and PEPP portfolios are continuing as the Eurosystem no longer reinvests principal payments from maturing securities. The Transmission Protection Instrument is available to counter unwarranted, and those facts leave the ECB with room to press ahead on inflation without changing its broader market backstops. Borrowers now face higher policy rates, while the staff projections say the inflation shock is still working through energy costs and the growth path is still weaker than it was in March.
