ECB Hikes Rates Amid Energy Price Shock

The European Central Bank (ECB) raised its deposit rate by 25 basis points to 2.5% as energy prices surged, pushing eurozone inflation higher.

European Central Bank President Christine Lagarde described the ECB's decision as a 'no-brainer' but warned that inflation could remain above the bank's 2% target for longer than expected.

The renewed pressure comes as Brent crude has climbed above $100 a barrel amid U.S.-Iran tensions and disruption around the Strait of Hormuz, with European gas prices surging nearly 190% since the start of the year.

Markets are already pricing in at least three additional rate increases over the next year, with some economists expecting the deposit rate to reach 3%.