ECB Hikes Interest Rates by Quarter Point Amid Iran-Driven Inflation

The European Central Bank (ECB) raised interest rates by a quarter percentage point to 2.50% on Thursday, aiming to combat inflation fueled by high oil prices from the Iran conflict.

Bank President Christine Lagarde stated that 'the conflict in the Middle East continues to generate inflation pressures, and inflation is set to remain well above target for an extended period.'

The decision was made at a meeting held in Berlin, away from the ECB's Frankfurt headquarters. The central bank's move aims to reduce demand for goods by making borrowing more expensive.

High energy prices have contributed to eurozone inflation reaching 3.3% in August, above the bank's target of 2%. Oil prices have risen above $100 per barrel due to lower tanker traffic through the Strait of Hormuz under threat of Iranian attack.