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European Central Bank Raises Interest Rates by 25 Basis Points in September

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The European Central Bank raised its three key interest rates by 25 basis points at its September meeting on Thursday as inflation in the euro area exceeded its 2% medium-term target rate amid the ongoing war in the Middle East.

As widely expected, the interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will rise to 2.50%, 2.65% and 2.90%, respectively, effective Sept. 16.

The ECB said uncertainty over the outlook remains high, with an upside risk to inflation and a downside risk to economic growth.

"In relation to the energy shock, the updated scenarios put together by staff illustrate the broad range of outcomes for how growth and inflation would evolve under different assumptions about its intensity and duration, as well as its indirect and second-round effects," the ECB said, reiterating its commitment to ensure that the inflation rate stabilizes at its 2% target.

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