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ECB increases interest rate to 2.50%
The European Central Bank raised interest rates by 25 basis points to 2.50% in a move aimed at combating inflation caused by rising energy prices and geopolitical tensions, with expectations that inflation will remain above the 2% target until 2028. Despite an improved outlook for economic growth in the Eurozone, inflation is expected to average 3% in 2026 and gradually decline to 2.1% by 2028. The bank indicated that its future decisions will depend on economic data and inflation developments, while keeping interest rates high for a longer period due to concerns about inflation transferring to wages and core prices. The decision negatively impacted European markets, with the German DAX and French CAC 40 indices declining and bond yields rising, amid pressures stemming from higher oil prices.
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