First ECB Hike In Almost Three Years

The ECB raised policy rates by 25bp to 2.25%, citing upward revisions to medium-term inflation forecasts. The move marks the first rate hike since 2023 and suggests a sustained, data-dependent tightening path.

Key Takeaways

• 1.The ECB hiked its three key interest rates by 25bp, bringing the deposit rate to 2.25%.
• 2.The decision was unanimous and based on upwardly revised inflation forecasts rather than being merely precautionary.
• 3.Growth forecasts for the Euro area were marginally revised downwards for the next two years.

Table of Contents

• First ECB hike in almost three years
• Key points
• Forecast revisions and alternative scenarios
• Higher inflation forecast warrant higher rate
• Market impact
• Key conclusions from Q&A at the press conference
• Euro Area inflation - SEB vs ECB