Frankfurt, June 11 -- The European Central Bank (ECB) hiked key interest rates for the first time in nearly three years, responding to inflation pressures emanating from the Middle East conflict.

The ECB raised all three key interest rates by 25 basis points taking the deposit facility to 2.25 per cent, refinancing rate to 2.4 per cent and marginal lending facility to 2.65 per cent. The bank also raised its inflation projections for 2026-27 owing to a higher path for energy prices which could feed into food, goods and services inflation, ECB said.

"In the baseline of the new Eurosystem staff projections, headline inflation is expected to average 3.0% in 2026, 2.3% in 2027 and 2.0% in 2028. For inflation excluding energy and food, the ba...