ECB Hikes Rates Amid Ongoing Middle East Conflict

The European Central Bank (ECB) raised its main interest rates by 25 basis points for the second time this year, citing persistent inflation pressures. The move comes ahead of the Federal Reserve's September policy meeting, where markets are pricing in a possible U.S. rate hike.

The ECB Governing Council approved increases across all three key policy rates, with the central bank warning that inflation is expected to remain above its target for an extended period. Inflation pressures have been exacerbated by the ongoing conflict in the Middle East, which has pushed Brent crude prices above $100 a barrel for the first time since July.

The ECB's decision follows recent escalations between the United States and Iran, as well as Yemen's Iran-backed Houthis participating in regional attacks. As a result, global oil supplies remain under threat, further contributing to inflation concerns.