ECB Hikes Deposit Rate Amid Middle East Inflation Fears

The European Central Bank (ECB) has increased its deposit rate by 0.25 percentage points to 2.50% in an effort to combat inflationary pressures stemming from surging energy prices, exacerbated by the ongoing conflict in the Middle East.

This marks the second rate increase this year and has sent significant ripples through European bond markets, propelling the yield on Germany's 10-year government bonds to a 15-year high.

ECB President Christine Lagarde stated, 'We expect inflation to last longer than we had anticipated,' underscoring that the decision to raise rates was 'the obvious thing to do.'