ECB Raises Rates to 2.25% — Its First Hike in Three Years

The European Central Bank raised its three key interest rates by 25 basis points in June 2026 — its first increase in three years — lifting the deposit facility rate to 2.25%, the main refinancing rate to 2.40%, and the marginal lending rate to 2.65%.

Why the ECB moved after years of holding

The hike was largely prompted by rising energy prices pushing inflation pressures back up across the eurozone, reversing a multi-year period in which the ECB had held or cut rates. It marks a meaningful shift in direction after an extended pause.

What happened next

At its following meeting in July, the ECB held rates steady, widely expected after the June move. Markets are now pricing in a strong likelihood of a further rate increase at the ECB's September meeting, suggesting June's hike may be the start of a new tightening cycle rather than a one-off adjustment.

Why this matters beyond the eurozone

ECB rate moves influence borrowing costs and currency values well beyond the eurozone itself, affecting anyone dealing in euros, holding euro-denominated debt or investments, or doing business with European partners. A shift from years of low rates to renewed tightening is a meaningful signal for global markets, not just European ones.