The European Central Bank (ECB) has raised its key interest rates by 25 basis points, citing persistent inflationary pressures and growing uncertainty over the economic outlook in the euro area.

In a statement issued after its Governing Council meeting, the ECB said it had increased its deposit facility rate to 2.50%, while the main refinancing rate was raised to 2.65% and the marginal lending facility rate to 2.90%.

The bank said inflation remains above its medium-term target, with higher energy prices and geopolitical tensions—particularly in the Middle East—continuing to exert upward pressure on consumer prices.

According to the ECB's latest projections, average inflation is expected to reach 3.0% in 2026, before easing to 2.5% in 2027 and 2.1% in 2028, moving gradually closer to the bank's 2% target.

Growth outlook revised

The ECB also updated its economic forecasts, projecting 0.9% growth for the euro area in 2026 and 1.4% in 2027.

The central bank said economic activity is expected to recover gradually, although elevated uncertainty, weak external demand and geopolitical risks continue to weigh on the outlook.

The ECB reiterated that future monetary policy decisions will remain data-dependent and will continue to be guided by incoming economic and inflation indicators to ensure price stability across the euro area.(ILKHA)