ECB Hikes Rates as Inflation Pressures Mount

The European Central Bank (ECB) has increased its key interest rates by 25 basis points to 2.5% in an effort to combat rising inflation pressures.

The move, which was widely expected by investors, is a response to the ongoing conflict in the Middle East, which has driven up energy and food prices and pushed inflation above target for an extended period.

Inflation is forecast to average 3.0% in 2026, 2.5% in 2027, and 2.1% in 2028, according to the ECB's staff projections.