ECB Hikes Rates Again Amid Iran War-Driven Inflation Fears

The European Central Bank (ECB) raised interest rates for the second time this year to combat inflation triggered by the Iran war, despite warning that fuel prices could rise further. The ECB increased its policy rate to 2.50% from 2.25%, acknowledging that even then inflation was expected to stay above its 2% goal through to 2028.

The decision was taken as a month of relative calm has been shattered since end-August, with the U.S. and Iran hitting military, shipping, and energy assets, sending oil back above $100 a barrel. The ECB responded by raising interest rates to quell an energy-driven rise in inflation.

ECB President Christine Lagarde stressed that the bank did not pre-commit to any future moves, saying 'We have not debated at all any kind of future path.'