ECB Hikes Rates Amid Iran Tensions, Oil Prices Soar Above $100

The European Central Bank (ECB) raised its key interest rate by 25 basis points to 2.50% as inflation fears surged amid rising energy costs and geopolitical tensions in Iran, pushing oil prices above $100 a barrel.

Inflation is projected to remain above the ECB's 2% target through 2028, with average annual headline inflation estimated at 3% in 2026, 2.5% in 2027, and 2.1% in 2028.

The ECB also raised its growth forecasts for 2026 and 2027, citing an economy that had held up better than expected, with expansion projected at 0.9% this year, 1.4% next year, and 1.5% in 2028.