ECB lifts deposit rate to 2.5% on Middle East inflation

The ECB Governing Council, in its 10 September 2026 monetary policy decision, raised all three key interest rates by 25 basis points. The deposit facility moves to 2.50%, the main refinancing operations rate to 2.65%, and the marginal lending facility to 2.90%, effective 16 September 2026.

This is an official Governing Council rate decision. It is not a market rumor, and it is not an EU Commission fiscal package.

The Council cited the Middle East conflict as still generating inflation pressures, and said inflation is set to remain well above the 2% target for an extended period. ECB staff's baseline puts headline inflation at 3.0% in 2026, 2.5% in 2027, and 2.1% in 2028. Core inflation, excluding energy and food, is 2.5%, 2.6%, and 2.3% across those years. Growth is 0.9%, 1.4%, and 1.5%.

Compared with June, staff revised inflation up for 2027 and 2028 and revised growth up for 2026 and 2027. The Council said it will stay data-dependent and meeting-by-meeting, and that it is not pre-committed to a rate path. APP and PEPP portfolios keep running off with no reinvestment.

Bundesbank President Joachim Nagel told CNBC on 11 September that further hikes are "very much dependent" on energy prices. He said rates sit at the upper end of neutral territory and may need to enter "mild restrictive territory." He also said it is too early to speculate on one or two more hikes. The Council's own statement flags upside risks to inflation and downside risks to growth.

Energy is the live input. Brent already printed above $100, and EU winter gas storage is the other side of the same shock. Official-sector books this week also include Japan's record reserve drop and Treasury's $6 billion longer-debt buyback.

If you price euro funding or energy-sensitive inflation, mark the book at 2.50%, 2.65%, and 2.90% from 16 September. Use the 3.0 / 2.5 / 2.1 staff path as the baseline, and treat Nagel's energy-price dependency as the hedge, not as a locked next-meeting hike.