ECB Hikes Interest Rates to 2.5% Amid Ongoing Inflation Concerns

The European Central Bank (ECB) has increased interest rates to 2.5%, its second hike this year, in response to ongoing inflation concerns and fragile growth across the eurozone.

Konstantin Veit, Portfolio Manager at PIMCO, said 'Risks are skewed towards fewer hikes but acknowledge exceptionally high uncertainty.'

The ECB's decision was accompanied by updated forecasts, which show growth expectations have been revised higher and inflation forecasts have also moved up, reflecting elevated energy costs.

Richard Carter, head of fixed interest research at Quilter Cheviot, warned that the ECB's balancing act is becoming increasingly difficult as it tries to keep inflation under control without weighing too heavily on economic activity.