The European Central Bank has raised key interest rates for the first time in nearly three years. The reason was the acceleration of inflation in the eurozone amid rising energy prices due to the war surrounding Iran, UNN reports with reference to Euronews.
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The ECB raised the deposit facility rate by 0.25 percentage points to 2.25%. The main refinancing operations rate was also increased to 2.4%, and the marginal lending facility rate to 2.65%.
This marked the first rate hike since September 2023 and signifies the regulator's return to a tighter monetary policy after a period of easing in 2025.
The decision was made against the backdrop of accelerating inflation in the eurozone. In May, it reached 3.2%, the highest level since September 2023. One of the main factors cited is a 10.9% increase in energy prices due to the escalation of the situation in the Middle East.
At the same time, the eurozone economy is showing signs of a slowdown. In the first quarter of 2026, the GDP of the currency bloc's countries contracted by 0.2%. Economists warn of the risk of stagflation — a combination of weak economic growth and high inflation.
ECB Chief Economist Philip Lane previously stated that the consequences of the war surrounding Iran have worsened the region's economic outlook. ECB Executive Board member Isabel Schnabel also emphasized that delaying rate hikes is no longer possible due to the risk of anchoring inflation expectations.
For citizens and businesses, the decision will mean more expensive loans, mortgages, and financing for companies. Meanwhile, financial markets are already pricing in approximately a 50% probability of another rate hike in the fall.
Experts believe that the current decision could mark the beginning of a new cycle of monetary policy tightening in the eurozone.
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