The European Central Bank (ECB) raised its policy rate by 0.25 percentage points to counter rising prices.
On the 10th (local time), the ECB held a monetary policy meeting in Berlin, Germany, and raised the deposit facility rate, used as the effective key rate, from 2.25% to 2.5%. Along with the deposit facility rate, it also raised the main refinancing operations rate and the marginal lending facility rate, known as the three key policy rates, by 0.25 percentage points each to 2.65% and 2.90%, respectively. The rate increases take effect on the 16th.
The rate hike is aimed at taming inflation driven by oil prices. Last month, the eurozone's consumer price inflation reached 3.3%, the highest in about three years since 2023. It exceeded the ECB's 2% target for the sixth straight month. In particular, energy price inflation jumped from 10.3% in July to 1.43% in August.
In a statement, the ECB said, "The conflict in the Middle East continues to create inflationary pressures, and inflation is expected to remain well above target for a considerable period," and noted, "Today's decision underscores our monetary policy efforts to stabilize inflation at the 2% medium-term target."
At its monetary policy meeting in July, the ECB kept rates on hold but said it would watch the spillover effects of energy prices. As the Middle East war has flared again recently and pushed international oil prices above $100 per barrel, concerns about rising prices in the eurozone have also grown.
The ECB on the day raised its eurozone economic growth forecast to 0.9% for this year and 1.4% for next year, up from 0.8% and 1.2% in June. It kept the consumer price inflation forecast for this year at 3.0% but raised next year's from 2.3% to 2.5%.