ECB Hikes Rates as Eurozone Inflation Hits 3.3%

The European Central Bank (ECB) raised its key interest rate by 0.25 percentage points to 2.5% on Thursday, citing rising oil and gas prices as the main driver of eurozone inflation.

Inflation in the eurozone reached 3.3% in August, up from 2.9% in July, with energy prices increasing by 14.3% from 10.3%. Core inflation, which excludes energy costs, eased to 2.4%, while services inflation fell to 3% from 3.3%.

The ECB Governing Council said that the conflict in the Middle East continues to generate inflation pressures and that inflation is expected to remain above target for an extended period.

ECB President Christine Lagarde stated that the decision was a 'no brainer' and that policymakers had not discussed a path for future rates. She warned that further supply disruptions or a cold winter combined with low gas storage levels would put more pressure on gas prices.