The European Central Bank (ECB) raised its deposit rate on Thursday (10) by 0.25 percentage points to 2.5%, in an attempt to contain renewed inflationary pressure driven mainly by rising energy prices. It was the second interest rate hike in 2026.
The decision came after eurozone inflation reached 3.3% in August, moving further away from the institution’s 2% target. Higher oil and gas prices, amid the conflict in the Middle East and supply uncertainties, have begun to weigh more heavily on European consumers and businesses.
More expensive credit to contain inflation
By raising interest rates, the ECB makes credit more expensive and seeks to reduce part of the demand in the economy. The move could limit the pass-through of energy costs to other prices, but it also increases borrowing costs for households, businesses, and governments.
According to Reuters and the Associated Press, the refinancing rate increased to 2.65%, while the marginal lending facility rate rose to 2.9%. The new rates take effect on September 16.
Projections were revised
The ECB now projects average inflation of 3% in 2026, 2.5% in 2027, and 2.1% in 2028. Despite price pressures, the growth forecast for the eurozone this year was raised to 0.9%, signaling that economic activity showed greater resilience than expected.
ECB President Christine Lagarde highlighted the uncertainty of the scenario and indicated that future decisions will be made meeting by meeting, based on available data. This means that Thursday’s rate hike does not, in itself, set an automatic path for further increases.
Energy remains at the center of risks
European dependence on imported energy leaves the region vulnerable to supply disruptions and fluctuations in oil and gas prices. As winter approaches in the Northern Hemisphere, energy stocks and costs are expected to remain among the main factors monitored by the central bank.
The impact of the decision will be monitored by markets and European governments. The ECB’s challenge is to curb inflation without causing an excessive slowdown in an economy that is still growing moderately.
Sources: Reuters and Associated Press.
