Overview
- The ECB unanimously raised its deposit rate by 25 basis points to 2.25% on Thursday, June 11, marking the bank's first increase since 2023.
- Officials said the move was a precaution against a wider pass-through from higher oil and gas prices tied to the Iran conflict, which they warned could feed into wages and services.
- Staff forecasts were revised higher for 2026 inflation to about 3.0% while the euro-area growth forecast was trimmed to roughly 0.8%, reflecting slower activity and the energy shock's drag.
- The bank described a meeting-by-meeting, data-dependent approach and stopped short of a fixed path, but markets and the IMF expect further tightening if inflation and expectations remain elevated.
- Households and firms will face higher borrowing costs quickly, with variable-rate mortgage holders seeing immediate repayment rises, and the move reverses the ECB's easing cycle of 2024–mid‑2025.