The European Central Bank (ECB) raised its key interest rate by 25 basis points to 2.25% on Thursday, marking its first rate hike since 2023 as inflationary pressures linked to the Iran conflict continue to build.
The central bank said the decision was aimed at preventing inflation from becoming entrenched as the war-driven energy shock spreads through food, goods and services.
The ECB also raised its inflation outlook, forecasting euro zone inflation at 3% in 2026 before gradually easing to its 2% target by 2028. At the same time, officials lowered growth projections, citing weaker confidence, higher commodity prices and pressure on household incomes.
Analysts said the move reflects growing concern that higher energy prices could keep inflation elevated even as economic growth remains sluggish across Europe.
Related Tweet:
Today we raised our key interest rates by 0.25 percentage points.
— European Central Bank (@ecb) June 11, 2026
We are doing this because the war in the Middle East is driving up prices and we want to see inflation stabilise at 2% in the medium term.
Read more about our decisions https://t.co/hwz8rSx8AE pic.twitter.com/yNuAG6F05X
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