ECB Hikes Interest Rates to Combat Inflation Driven by Iran War Oil Prices

The European Central Bank (ECB) has raised interest rates by a quarter percentage point to 2.5 percent in an effort to combat inflation driven by high oil prices stemming from the Iran war.

The decision, which was widely expected, comes as the eurozone's annual inflation rate hit 3.3 percent in August, surpassing the bank's target of 2 percent.

The ECB's move is also being closely watched by the U.S. Federal Reserve, whose next meeting is scheduled for September 15-16. Fed Chair Kevin Warsh has indicated that the bank may need to take further action to contain U.S. inflation of 3.7 percent.