The European Central Bank raised the deposit rate 25bp to 2.25%, its first increase in nearly three years, citing rising inflationary pressure tied to the Iran conflict. The move matched market expectations and markets broadly expect another 25bp by September. The ECB stressed it will not precommit to future action, saying the outlook remains uncertain, with upside risks to inflation and downside risks to growth, and that the war’s full medium‑term impact depends on the intensity and duration of

The European Central Bank raised the deposit rate 25bp to 2.25%, its first increase in nearly three years, citing rising inflationary pressure tied to the Iran conflict. The move matched market expectations and markets broadly expect another 25bp by September. The ECB stressed it will not precommit to future action, saying the outlook remains uncertain, with upside risks to inflation and downside risks to growth, and that the war’s full medium‑term impact depends on the intensity and duration of the energy price shock and second‑round effects. Officials flagged that inflation is spreading beyond energy and may be hard to contain even if hostilities end quickly. New quarterly projections show inflation higher than previously forecast and not returning to 2% until 2028, and the outlook warns higher inflation and borrowing costs are eroding purchasing power and slowing growth.