Today, the European Central Bank (ECB) decided to raise its key interest rates by 25 basis points. The deposit rate thus is at 2.25%. The main refinancing rate is 2.40%, and the marginal lending rate is 2.65%, respectively, with effect from 17 June 2026.
Florian Heider, Scientific Director of the Leibniz Institute for Financial Research SAFE, comments:
“The interest rate rise was unavoidable due to the oil price shock. With an inflation rate of 3.2 percent in May, the euro area remains well above its medium-term target of 2 percent. Higher interest rates are therefore the primary means of curbing inflation. To fulfill its mandate to maintain price stability, the European Central Bank must take the effects of rising commodity prices seriously.
The economic situation differs from the last period of high inflation following the pandemic and the energy crisis caused by Russia’s war of aggression against Ukraine. At the moment, demand is weak and the economy is undergoing structural changes. The consequences for inflation are unclear. Therefore, it is appropriate that the ECB is not currently signaling any further interest rate moves.
This step will not be helpful for the European economy, as the rate increase comes at a time when economic growth is already weak. The key question is whether higher energy prices will trigger second-round effects.”
