ECB Raises Interest Rates for Second Time in 2026 Amid Ongoing Iran War

The European Central Bank (ECB) raised its interest rates for the second time in 2026 to combat rising inflation, triggered by the ongoing Iran war. The ECB increased its policy rate to 2.5% from 2.25%, with economists predicting further hikes.

The decision was made in response to a surge in energy prices, which have pushed oil above $100 a barrel. Despite this, the ECB expects inflation to remain above its 2% target until 2028.

The bank's president, Christine Lagarde, emphasized that the decision does not pre-commit to future moves, and market expectations for further hikes have increased, with traders pricing in 60 basis points of increases by April 2027.