ECB Hikes Interest Rates Again to Combat Euro Zone Inflation

The European Central Bank (ECB) has raised interest rates for the second time this year to combat rising inflation in the euro zone. The move aims to tame an inflation rise driven by higher energy costs from the Iran conflict, which is pushing prices well past the ECB's 2 percent target.

Surging oil and natural gas prices have pushed inflation above 3 percent across the 21-country euro zone last month, exceeding the ECB's target. The central bank has raised its benchmark deposit rate to 2.5 percent, the upper end of the 'neutral' range considered by policymakers.

The move comes as energy costs continue to rise, with gas storage levels below historic norms ahead of the winter heating season. While economic growth is holding up better than feared, high energy costs have yet to filter down into other goods and services.