Economy News

ECB raises rates for the first time since 2023 as the war's energy shock lifts inflation

The European Central Bank raised its interest rates by a quarter point on Thursday 11 June, its first increase since September 2023. Paperjam reports the deposit rate rises to 2.25%, the main refinancing rate to 2.40% and the marginal lending rate to 2.65%, effective 17 June. The decision was unanimous, according to Eunews, which notes eurozone inflation reached 3.2% in May, up from 3.0% in April, with energy inflation at 10.9%.

The ECB now expects inflation of 3.0% this year, 2.3% in 2027 and 2.0% in 2028, revising the first two up, and cut its growth forecasts to 0.8% for 2026 and 1.2% for 2027.

“I have to kill inflation if it awakens” — Christine Lagarde, ECB president, via The Edge Malaysia

How each outlet framed it

• Eunews — Lagarde's case that the move “is not drastic” and holds across possible scenarios for the energy shock linked to the Middle East war.
• Paperjam — the Luxembourg view: higher costs for households and firms with variable-rate loans, and wider margins but possibly weaker loan demand for banks.
• The Edge Malaysia — the follow-through four days later: Lagarde says indirect effects have started to appear “more or less everywhere”, while markets scaled back bets on further hikes after a US-Iran interim deal to reopen the Strait of Hormuz lowered energy prices.

What we don't know yet: the next step. The ECB has not committed to a path and will decide meeting by meeting; markets expect the deposit rate to reach 2.5% by year-end, with a 25% chance of 2.75%, a move that had been fully priced a week earlier.