ECB Set for September Rate Hike Amid Ongoing Iran Conflict

The European Central Bank (ECB) is gearing up to raise interest rates in September for the second time this year, according to sources. This move aims to combat the inflationary pressures caused by the ongoing Iran war and high energy prices. The ECB raised borrowing costs in June for the first time in nearly three years, and now policymakers believe it's time to increase the policy rate again to 2.5% from 2.25%.

The decision comes as inflation remains near 3%, and natural gas prices continue to rise, a key factor driving up energy costs in the euro zone. Despite these challenges, the ECB notes that the region's economy is showing signs of resilience, with output data and business surveys indicating it can withstand further tightening.