ECB Hikes Rates Amid Escalating Middle East Conflict

The European Central Bank (ECB) raised interest rates for the second time this year to combat rising energy costs and inflation pressures in the Middle East. The benchmark rate was increased by a quarter percentage point to 2.5 percent, its highest level since March last year.

The move comes as global energy prices surge due to renewed fighting in the Middle East, with Brent international oil reaching over $100 a barrel this week and natural gas prices hitting their highest level in over three years.

ECB policymakers lifted borrowing costs for the first time since 2023 in June in response to an earlier energy shock triggered by the US war on Iran. The central bank kept its inflation forecast unchanged at 3 percent for this year but raised it slightly to 2.5 percent for next year.