The European Central Bank (ECB) has raised interest rates for the second time this year to combat rising energy prices and inflation pressures stemming from conflicts in the Middle East.
On September 10, local time, the ECB held a monetary policy meeting in Frankfurt, Germany, and decided to increase the deposit rate from 2.25% to 2.50%, marking a 0.25 percentage point rise. This follows an increase in June, making it the second hike in three months.
The main refinancing rate was raised from 2.40% to 2.65%, and the marginal lending rate increased from 2.65% to 2.90%, each by 0.25 percentage points. The new rates will take effect on September 16.
This decision aligns with market expectations. A prior survey conducted by Reuters indicated that all economists anticipated the ECB would raise the deposit rate to 2.50% at this meeting.
After concluding its easing policy last year, the ECB had kept rates steady until June, when it shifted to a tightening stance by raising the deposit rate from 2.00% to 2.25%. With this latest increase, rates have risen a total of 0.50 percentage points this year.
The backdrop for this increase is the renewed inflationary pressure due to worsening conditions in the Middle East. Concerns have grown that rising international oil prices could destabilize inflation in the eurozone.
In August, the eurozone's consumer price index (CPI) rose 3.3% compared to the same month last year, exceeding the ECB's inflation target of 2%. This increase is higher than the previous month's rate of 2.9% and represents the highest level since September 2023. Notably, the rate of increase in energy prices surged from 10.3% in July to 14.3% in August.
In a statement, the ECB noted that the conflict in the Middle East continues to exert upward pressure on prices, indicating that inflation is likely to remain above target for the foreseeable future. The decision reflects the ECB's commitment to returning inflation to its medium-term target of 2%.
However, concerns about economic slowdown persist. The ECB slightly raised its growth forecast for the eurozone from 0.8% to 0.9% for this year but acknowledged significant uncertainty surrounding economic projections. The average inflation rate is expected to be 3.0% this year and 2.5% next year.
* This article has been translated by AI.
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