The European Central Bank raised its key interest rates by 25 basis points today. This action marks the first such increase since 2023. The ECB lifted its main deposit rate to 2.25% from 2.00%.
The move makes the ECB the first major central bank to tighten policy in response to the Iran conflict. This ongoing conflict has driven up global energy costs.
Inflation reached 3.2% in May. This figure exceeds the bank's 2% target. The ECB also increased its inflation forecast for 2026. Financial markets are currently pricing in further rate increases for later this year.