ECB Raises Rates for First Time in Three Years — Deposit Rate to 2.25% as Iran War Fuels Inflation

The ECB Governing Council raised its three key interest rates by 25 basis points on June 11, 2026 — its first hike in nearly three years. The deposit facility rate rose from 2.00% to 2.25%, the main refinancing rate to 2.40%, and the marginal lending facility to 2.65%, effective June 17. The move responded to eurozone inflation hitting 3.2% in May (the highest since September 2023) as the 2026 Iran war disrupted Gulf energy exports and pushed oil and gas prices sharply higher. The decision came despite a concurrent Q1 2026 GDP contraction of -0.2%, putting the ECB in a stagflationary bind. President Christine Lagarde signalled further tightening would be 'data-dependent,' with markets pricing a possible second hike later in 2026.