ECB hikes 25 bp and lifts 2027–28 inflation forecasts; markets price more tightening

On 10 September 2026, the ECB raised its key rates by 25 bp, taking the deposit facility to 2.50%, the main refi rate to 2.65%, and the marginal lending rate to 2.90%. Staff projections were revised up, with headline inflation seen averaging 2.5% in 2027 and 2.1% in 2028, and markets pricing ~85 bp of additional tightening by end-2027 as European yields hit multi-year highs. The move underscores a higher-for-longer stance despite softer near-term core prints.