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ECB raises deposit rate to 2.50% and updates inflation forecasts
The ECB lifted its 2027 and 2028 core inflation projections, while also raising its 2026 and 2027 GDP outlook, keeping policy normalization on a tighter track.
The European Central Bank raised its three key interest rates by 25 basis points, taking the deposit rate to 2.50%, as it cited ongoing inflation pressure linked to the Middle East conflict, according to Action Forex.
In its decision, the ECB said inflation is expected to stay well above target for an extended period and that it is not pre-committing to a specific rate path, while still framing the move as part of policy normalization toward the 2% medium-term goal.
The ECB also published new staff projections that kept 2026 headline inflation at 3.0%, but raised 2027 to 2.5% from 2.3% and 2028 to 2.1% from 2.0%. Core inflation was unchanged for 2026 at 2.5%, but increased for 2027 to 2.6% and for 2028 to 2.3%.
On growth, the ECB revised its forecasts higher, lifting 2026 GDP to 0.9% from 0.8% and 2027 to 1.4% from 1.2%, while leaving 2028 unchanged at 1.5%, attributing the upgrades mainly to greater-than-expected euro area resilience. The ECB maintained an upside risk bias for inflation and a downside risk bias for growth, noting the impact depends on the intensity and duration of the energy shock and its indirect effects.