ECB lifts key rates by 25 bps as eurozone inflation moves above target

The European Central Bank raised its three key policy rates by 25 basis points, returning to a more restrictive stance as eurozone inflation climbs above the 2% target. The decision marks a turn away from the prior easing cycle aimed at supporting growth, underscoring the ECB's renewed focus on containing resurgent price pressures. President Christine Lagarde and the Governing Council signaled continued readiness to use interest-rate policy to steer inflation, reinforcing expectations that the ECB will prioritize price stability. Prediction markets adjusted quickly. Pricing implies a 20% probability of a further 25-basis-point increase at the July 2026 meeting. By contrast, the odds of meaningful easing are negligible, with a scenario of a 50+ basis-point cut at the July 2026 meeting priced at roughly 0%. Key takeaways - The 25-basis-point hike aligns with a shift toward tighter monetary policy. - Prediction markets price a 20% chance of a 25-basis-point hike in July 2026. - Markets are assigning minimal likelihood to rate cuts at the July 2026 meeting. What to watch The July 2026 ECB meeting is set to be a key focal point for markets. Incoming eurozone inflation readings and ECB guidance will shape expectations, with any hawkish signals from officials likely to bolster current pricing for a more restrictive policy path. A sharper-than-expected economic slowdown or signs of financial stress could revive rate-cut expectations. Get prediction market intelligence as a structured API feed. Early access waitlist.