ECB Hikes Interest Rates Amid Energy Price Surge

The European Central Bank (ECB) raised interest rates for the second time this year in response to ongoing Middle East tensions and rising energy prices. The benchmark rate was increased by a quarter percentage point to 2.5 percent, its highest level since March last year.

This move follows a similar increase in June, and the ECB's governing council has unanimously agreed that further hikes are possible. However, President Christine Lagarde declined to give clear guidance on future interest rates, citing uncertainty in the economic outlook.

The rate hike aims to combat inflation, which is expected to remain above target for an extended period. The ECB has raised its growth forecasts for this year and next, but maintains its inflation projections at 3 percent for 2026.