The European Central Bank (ECB) announced adjustments to key lending facilities, setting the deposit facility interest rate at 2.25%, the main refinancing operation interest rate at 2.40%, and the marginal lending facility interest rate at 2.65%, effective June 17, 2026. The ECB cited the escalating inflationary pressure stemming from the conflict in the Middle East as the primary driver for this decision to raise key interest rates. The central bank stated that the increase was deemed appropriate after evaluating various scenarios concerning the development of this geopolitical shock and its projected medium-term impact on the euro area.
In line with its latest forecasts, the ECB outlined several key economic projections. Under the main scenario, the general inflation rate is expected to reach 3% in 2026, subsequently moderating to 2.3% in 2027, and settling at 2% in 2028. Furthermore, the forecast for core inflation—that is, inflation excluding energy and food products—is projected to be 2% overall.
More granularly, core inflation is anticipated to be 1.5% in 2026, 1.6% in 2027, and 1.7% in 2028. These adjustments to the interest rate structure reflect the ECB’s ongoing effort to manage inflationary expectations amid global uncertainties. The decision underscores the central bank’s commitment to stabilizing prices by adjusting the cost of money across various lending mechanisms.
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