ECB Raises Interest Rates for Second Time This Year, Setting Deposit Rate at 2.50%

The European Central Bank (ECB) raised its three key policy rates by 0.25 percentage points each on the 10th (local time) in response to rising inflation, including energy prices.

The ECB announced that it held a monetary policy meeting in Berlin on this day and decided to raise the deposit rate to 2.50 percent, while increasing the main refinancing rate and the marginal lending rate to 2.65 percent and 2.90 percent, respectively, each by 0.25 percentage points.

In a statement, the ECB explained that "the outlook remains highly uncertain, with upside risks to inflation and downside risks to economic growth."

This marks the second policy rate hike by the ECB since the outbreak of the war in Iran at the end of February this year.

Last June, the ECB raised interest rates for the first time since September 2023.

The 2.50 percent deposit rate is the highest level since April of last year.

Market experts surveyed by Bloomberg had also anticipated a 0.25 percentage point hike at this meeting.

Driven by soaring energy prices stemming from the Middle East war, the eurozone's annual inflation rate climbed to a three-year high of 3.3 percent last month, remaining above the ECB's 2 percent target for the sixth consecutive month.

As the war intensified again, international oil prices surged above 100 dollars per barrel the previous day, amplifying inflation concerns within the eurozone.

During its monetary policy meeting in July, the ECB had previously signaled that it would closely monitor the spillover effects of energy prices despite freezing interest rates at the time.

Following today's hike, the gap between the ECB deposit rate and South Korea's benchmark interest rate (3.00 percent) narrowed to 0.50 percentage points, while the gap with the U.S. benchmark interest rate (3.50 to 3.75 percent) stood at 1.00 to 1.25 percentage points.

(Photo: Getty Images)
※ Please note: This article was translated by AI and may contain errors.