ECB raises rates on the Iran-driven energy shock, first hike since 2023
The deposit rate goes to 2.25% as war-driven oil prices push 2026 inflation projections to 3.0% amid stalling growth
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Summary
On 11 June 2026 the Ecb raised its three key rates by 25 basis points, deposit facility to 2.25%, main refinancing to 2.40%, marginal lending to 2.65%, its first increase since 2023. The move responded to the largest oil supply disruption on record's effect on oil prices, which lifted the 2026 headline-inflation baseline to 3.0%. Eurosystem staff cut 2026-27 growth forecasts, citing the war's effect on commodities, real incomes and confidence. President Lagarde stressed the hike was a response to the energy shock, not a committed path, and defended price stability despite weak growth. European equities fell modestly.
Why it matters
Raising rates into a stagnating economy signals "higher for longer" and confronts the eurozone with 1970s-style stagflation risk, the clearest sign the Gulf war has reached ordinary Eurozone borrowing costs.