ECB raises rates by 25 basis points and revises inflation expectations upward

The European Central Bank has raised its three key interest rates by 25 basis points, bringing the deposit rate to 2.50%. The decision is reported by three separate accounts: TradingFacile, Forbes Italia and Money.it, based on the decision, the press conference and market data.

The movement in the cost of money is the minor fact. The major fact lies in the projections: Frankfurt has raised its overall inflation estimates to 2.5% for 2027 and 2.1% for 2028. The core component, which excludes the most volatile items, rises to 2.6% and 2.3% respectively. This means the central bank does not expect a rapid return to target: in 2028 the core measure remains above the level the institution considers consistent with price stability.

On the real side of the economy, gross domestic product growth forecasts for the eurozone have been set at 0.9% for 2026 and 1.4% for 2027.

The figure that explains the move is that of August: in the eurozone, the consumer price index rose 3.3% year-on-year, against 2.9% in July. This is an acceleration of four tenths of a point in one month, at a time when the central bank is simultaneously raising rates and admitting that the return to target will take longer than expected.

Indicator	Value
Deposit rate	2.50%
Eurozone consumer prices, August	+3.3% annual (July: +2.9%)
Expected inflation 2027 / 2028	2.5% / 2.1%
Expected core inflation 2027 / 2028	2.6% / 2.3%
Expected growth 2026 / 2027	0.9% / 1.4%

France within that average

The eurozone average, as always, conceals disparities. According to the Insee’s economic forecast published on September 10 and reported by Nachrichten.fr, the French economy will grow by only 0.4% this year. On this point the news currently comes from a single source (the Insee forecast reported by Nachrichten.fr, via Franceinfo); no independent confirmation available.

The quarterly breakdown explains the total: French gross domestic product fell 0.2% in the winter quarter and stagnated in spring; the institute then estimates +0.1% in the third quarter and +0.2% in the fourth. For Germany, Spain and the United Kingdom, growth roughly three times that of France is expected for the year on average.

At the Council of Ministers meeting on September 10, the French government identified the long-term financing of social security as the central reform task, citing pensions and healthcare. At the same meeting, an order of magnitude was put on the table: two percentage points of value-added tax would roughly correspond to the revenue needed to raise net wages by 2%, but would immediately weigh on consumer prices. This is precisely the type of trade-off a central bank in a tightening phase watches closely.

What we don’t know

The dossier does not contain the date of the meeting nor the number of Governing Council members in favor of the decision, does not report ECB indications on subsequent moves, and does not contain the updated value of the other two key rates besides the deposit rate. On the French side, the text of the Insee forecast and the opposition’s reactions to the proposals discussed at the Council of Ministers are not available.

The verifiable point remains this: the central bank is raising the cost of money while also raising expected inflation for the following two years, and one of the European Union’s four largest countries is entering that phase with estimated annual growth of 0.4%.