The European Central Bank (ECB) raised interest rates by 25 basis points at its meeting earlier today, Thursday, September 10th, as expected. This increase raised the three main interest rates: the deposit rate to 2.50%, the main refinancing operation rate to 2.65%, and the lending facility to 2.90%.

The ECB’s policy statement indicated that the conflict in the Middle East continues to generate inflationary pressures, and inflation is expected to remain well above the target level for an extended period. The Governing Council reaffirmed its commitment to a monetary policy that will ensure inflation remains below the 2% target over the medium term.

Inflation is projected to average 3% this year, 2.5% next year, and 2.1% in 2028. Core inflation, which excludes food and energy prices, is expected to reach 2.5% this year and 2.6% next year. The Governing Council will closely monitor the situation and adopt a data-driven approach, making decisions at each meeting to determine the appropriate monetary policy stance. Its decisions will be based on its assessment of the inflation outlook and the risks surrounding it.

The Appropriations Purchase Programme (APP) and the Pandemic Emergency Purchase Programme (PEPP) are being phased out at a measured and expected pace, as the European Central Bank (ECB) has ceased reinvesting capital payments from maturing securities.

Markets are awaiting the ECB President’s comments and questions from journalists at the press conference, which is expected to begin in approximately 45 minutes.