ECB raises deposit rate to 2.50%: a firm hike, no future path

The decision expected for the day has arrived: the Governing Council of the European Central Bank has raised the three key interest rates by 25 basis points. The rate on deposits held at the central bank rises to 2.50%, the rate on main refinancing operations to 2.65%, and the rate on the marginal lending facility to 2.90% (ANSA).

This is the second increase since June 2026, with a pause in between in July. The monetary policy meeting was not held in Frankfurt: the Governing Council was hosted by the Bundesbank in Berlin (Sky TG24).

Revised projections

The updated macroeconomic outlook from the central bank’s experts is the least predictable part of the package. Growth in the euro area is estimated at 0.9% this year, 1.4% in 2027 and 1.5% in 2028: the first two figures are revised upward compared with the previous exercise, the third downward. On inflation, the overall estimate for 2026 remains at 3.0%, with upward revisions for the following years, while the core component is put at 2.5% in 2026, 2.6% in 2027 and 2.3% in 2028 (AGI).

	2026	2027	2028
Growth	0.9%	1.4%	1.5%
Core inflation	2.5%	2.6%	2.3%

The detail that weighs most heavily lies in the sequence: core inflation expected in 2027 is higher than in 2026. This is not the downward trajectory on which the rate-cutting phase was built.

The fact that drove the decision was already known in the morning: in August, euro area inflation jumped to 3.3%, the highest level since September 2023, driven by the surge in gas and oil prices. In the monetary policy statement, the Governing Council writes that “The conflict in the Middle East continues to generate pressure on inflation.”

Scenarios on the conflict

The central bank’s experts have built alternative scenarios on the duration and intensity of the conflict in the Middle East and its knock-on effects. This is a technical admission of how much the reaction function today depends on a variable that no central bank controls: the price of energy.

On this point, the link with the rest of the day’s events is direct. Brent crude returned above 100 dollars a barrel today, with gas at elevated levels, and the front pages of Il Mattino and La Stampa lead with oil, gas and excise duties, signalling the risk of new increases at the pump (Sarno Notizie). The governor of the Finnish central bank, Olli Rehn, had pointed to the geopolitical risks linked to the Middle East crisis and the blockade of the Strait of Hormuz as a factor pushing up energy commodity prices (Benzinga Italia). Bundesbank president Joachim Nagel had noted that markets assigned a 95% probability to a September hike: today’s decision did not surprise operators.

What we don’t know

We don’t know where the cycle will stop. At the press conference, President Christine Lagarde said: “We did not discuss any kind of future path whatsoever.” This is a formula that closes the door to extrapolations: no number of subsequent moves can be derived from the projections, and the central bank itself puts in writing that the outcome depends on an external scenario.

The effect that will be measured first is on credit. According to a study by FABI cited by AGI, the new hike risks making mortgages and loans more expensive at a time when credit to Italian households had returned to growth. The cost of money decided today in Berlin reaches monthly payments according to the timing set by contracts: those with a variable rate will see it in upcoming readings of the reference indices, while those taking out a mortgage will already find it in current offers.