ECB Becomes First Major Central Bank to Raise Rates Amid Energy Price Jumps

The European Central Bank (ECB) has raised interest rates for the first time in almost three years, leading the charge among central banks in developed economies to tackle inflation driven by the war in Iran.

The ECB lifted its key rate to 2.25% from 2%, a move that was widely expected by markets but underscores the challenges facing major economies from the jump in energy prices caused by the prolonged closure of the Strait of Hormuz.

Investors are betting the central bank will lift rates at least once more this year, making the ECB the first major central bank to tighten monetary policy in response to the jump in energy prices.