After almost three years, the ECB raises interest rates and reacts to the war with Iran. He expects higher inflation in the eurozone and weaker economic growth.
The European Central Bank (ECB) raised its interest rates for the first time in almost three years on Thursday. It moved the key deposit rate upwards by 0.25 percentage points to 2.25%. TASR informs about it based on the report of the DPA agency.
Due to the war with Iran, the European Central Bank (ECB) predicts higher inflation and weaker economic growth for the Eurozone. The basic scenario assumes an average inflation rate of 3% this year, the ECB announced on Thursday. TASR informs about it based on the report of the DPA agency.
The ECB published updated forecasts after its meeting on Thursday, in which it raised its interest rates for the first time in almost three years. In line with expectations, it moved the key deposit rate from 2% to 2.25%.
Expected inflation is significantly above the target value of 2%, which the ECB considers optimal for maintaining price stability in the medium term. Back in December, the ECB forecast that the average inflation rate in 2026 would reach 1.9%. In March, it revised this estimate to 2.6%, as the war in the Middle East caused a sharp increase in energy prices. For 2027, the ECB now expects inflation at the level of 2.3%, and in 2028 it expects a return to the two percent target.
The outlook for the economy has also worsened. The ECB predicts this year’s growth for the monetary union at the level of only 0.8%, in 2027 it expects an acceleration to 1.2%. The March forecast expected slightly stronger growth in 2026 and 2027, at the level of 0.9% and 1.3%, respectively.
