ECB Raises Deposit Rate by 0.25 Percentage Points to 2.50% per Year, Its Second Rate Hike This Year

[Financial News] The European Central Bank (ECB) raised all three key policy rates by 0.25 percentage points on the 10th (local time) to counter inflationary pressures, including rising energy prices.
The ECB said after its monetary policy meeting in Berlin, Germany, that it would raise the deposit facility rate to 2.50% per year and increase the key interest rate (main refinancing rate) and marginal lending facility rate by 0.25 percentage points each, to 2.65% and 2.90%, respectively.
In a statement, the ECB assessed that "uncertainty surrounding the outlook remains high, with upside risks to inflation and downside risks to economic growth."
This is the ECB’s second policy rate hike this year, following the outbreak of the war with Iran in late February. The ECB had previously raised rates in June, marking its first hike since September 2023. The deposit facility rate has now reached its highest level since April last year.
The surge in energy prices caused by the war in the Middle East is driving the inflationary pressure. Consumer price inflation in the Eurozone, the 21 countries that use the euro, stood at 3.3% last month, its highest level in three years, and exceeded the ECB’s 2% target for the sixth consecutive month. As the war intensified again and international oil prices surged past $100 per barrel the previous day, concerns about further inflation in the Eurozone have also grown.
The ECB had kept rates unchanged at its meeting in July but said it would closely monitor the potential spillover effects of energy prices.
Following the hike, the gap between the ECB’s deposit facility rate and South Korea’s policy rate of 3.00% was adjusted to 0.50 percentage points, while the gap with the U.S. policy rate of 3.50–3.75% was adjusted to 1.00–1.25 percentage points.
[email protected] Kim Dong-chan Reporter