ECB Hikes Rates Amid Iran War-Driven Inflation Fears

The European Central Bank (ECB) has raised interest rates for the second time this year to combat energy-driven inflation triggered by the Iran war. The ECB increased its policy rate from 2.25% to 2.50%, acknowledging that even with this hike, inflation is expected to remain above its 2% goal through 2028.

The move comes as a response to the recent surge in oil prices, which have risen above $100 per barrel after the US and Iran hit military and energy assets. The ECB also warned of potential further increases in fuel prices due to supply disruptions or an unusually cold winter.

Economists expect the ECB's decision to be the last hike for now, but some see a risk of further tightening due to the economy's resilience and persistent inflation outlook.