ECB Hikes Interest Rates to Combat Energy-Fueled Inflation

The European Central Bank (ECB) raised its benchmark interest rate by a quarter percentage point to 2.50% in an effort to quell inflation fueled by high oil prices from the Iran war.

According to Christine Lagarde, ECB President, '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 despite a stronger-than-expected economy, which suggests businesses can weather the higher borrowing costs.

Lagarde emphasized that the outlook remains highly uncertain, with risks to the upside for inflation and to the downside for economic growth.