What are the current ECB interest rates?

The ECB confirmed three key rates: the refinancing rate for banks is 2.40%, the deposit facility rate is 2.25%, and the marginal lending rate for commercial banks is 2.65%.

Why could oil prices affect the interest rate decision?

More expensive oil increases transport and energy costs, which is passed on to prices of almost all goods and services, moving inflation away from the ECB's 2% target, which could prompt the ECB to keep or raise interest rates.

How do ECB decisions affect Croatia?

Croatia has been part of the eurozone since 2023, so ECB monetary policy applies in Croatia as well. Žigman expects that future ECB decisions will help bring inflation in Croatia back to levels close to the long-term average.

When will the ECB make its next interest rate decision?

The next key moment is September 2026, when the ECB will review new macroeconomic projections and assess risks, which will form the basis for a decision on any change in interest rates.

Economy

Oil Holds the Key to September's Rate Decision, Žigman Says

E.K. · 25. 07. 2026. | 3 min

The HNB governor warns that renewed US-Iran conflict could bring back inflationary pressures to the eurozone and Croatia. The ECB left rates unchanged on Wednesday.

Summary

ECB kept interest rates unchanged: refinancing 2.40%, deposits 2.25%, loans 2.65%.
Inflation in the euro area fell from 3.2% in May to 2.8% in June 2026, but remains above the 2% target.
The renewal of the US-Iran conflict has again raised oil prices, threatening new inflationary pressures in the eurozone and Croatia.
Governor Žigman announced that the ECB will review new projections in September 2026 and then decide on the direction of interest rates.

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Ante Žigman, governor of the Croatian National Bank (HNB) and a member of the European Central Bank's (ECB) Governing Council, said on Friday that the September decision on benchmark interest rates will largely depend on how oil prices move. He shared his assessment on LinkedIn, a day after the ECB confirmed that key interest rates remain at current levels.

ECB Holds Rates Steady Amid High Uncertainty

On Thursday, the ECB decided to keep interest rates unchanged, with Žigman describing the situation as "still extremely pronounced uncertainty." The rate for bank refinancing remains at 2.40%, overnight bank deposits yield 2.25%, and overnight loans to commercial banks stand at 2.65%. The reasons for caution, as the ECB notes, are uncertainty in inflation estimates due to the Middle East war and risks to eurozone economic growth.

Inflation Falls, but Oil Could Change Everything

Žigman reminded that inflation in the euro area fell to 2.8% in June 2026, down from 3.2% in May of the same year, partly attributed to the agreed ceasefire in the Middle East and lower oil prices. However, the situation has since become more complicated.

"The recent renewal of hostilities between the US and Iran has pushed oil prices back up, which will strengthen inflationary pressures and negatively impact economic activity,"

the governor wrote. The ECB's target is inflation of 2% in the medium term, and the current 2.8% is still above that goal.

September Crucial for New Projections

Žigman announced that the ECB will review new macroeconomic projections in September 2026 and assess the risks to their achievement. Particular attention will be paid to potential indirect and secondary effects of oil price increases on inflation, which typically appear with a time lag, such as rising transport and food costs. These new data will be crucial for the decision on the direction of interest rates.

What This Means for Croatia

Croatia has been part of the eurozone since January 1, 2023, so the ECB's monetary policy directly applies here, and the HNB no longer has an independent say on rates. Nevertheless, Žigman offered a Croatia-specific comment:

"The good news is that inflation in Croatia has been declining in recent months and approaching the eurozone average, and we expect this trend to continue in July. The rise in oil prices could, admittedly, revive inflationary pressures here as well, but the decisions we will make at upcoming meetings should ensure that inflation in Croatia returns to levels close to the long-term average."

Geopolitics as an Economic Factor

The situation in the Middle East is thus becoming a key factor in European monetary policy. The June ceasefire that helped reduce inflation has been replaced by renewed hostilities between the US and Iran, which has again pushed oil prices up on global markets. Higher oil prices mean more expensive fuel, transport, and heating, which ultimately affects almost all consumer prices. According to Žigman, the ECB will closely monitor all new indicators before the September meeting, where a change in the direction of monetary policy could occur depending on how the situation evolves.