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ECB raises rates by 25 basis points for first time in three years

ECB raises rates by 25 basis points for first time in three years

Meeting accounts showed inflation above target into 2027, while policymaker Yannis Stournaras said renewed U.S.-Iran hostilities had reset the inflation fight and lifted bets on further tightening.

Fact Check
Every element of the claim is corroborated. Reuters' meeting-accounts report confirms the ECB raised rates 25bp (deposit rate 2.25%) and projected inflation 'well above target into the first half of 2027.' CNBC, Euronews and WSJ confirm this was the first hike in about three years (since 2023). The July 10 Reuters report confirms Stournaras framed renewed US-Iran hostilities as putting the ECB 'back to square one' on inflation and that tightening bets rose. Minor nuance: sources describe it as the first hike by a major central bank since the inflation resurgence and 'first in almost three years' (since Sept 2023), consistent with the claim's 'first time in three years.'
Summary

European Central Bank policymakers were shown at their June 10-11 meeting that inflation would remain above the ECB’s 2% target into the first half of 2027 even with almost three additional 25-basis-point rate hikes embedded in projections. The Governing Council raised the deposit rate to 2.25%, its first increase in three years, and kept guidance neutral amid uncertainty over the Middle East and energy prices. ECB policymaker Yannis Stournaras later said renewed U.S.-Iran hostilities had put the bank back at “square one” in its inflation fight, while traders increased bets on further rate increases ahead of the July 22-23 meeting.

Terms & Concepts
  • basis-point: A unit equal to one-hundredth of a percentage point, commonly used to describe interest-rate changes.
  • deposit rate: The interest rate the ECB pays on deposits that commercial banks hold with the central bank.
  • inflation forecasts: Projections for future consumer price growth.