ECB Hikes Rates to 2.5% Amid Ongoing War-Driven Inflation Surge

The European Central Bank (ECB) has raised its key interest rate to 2.5% in an effort to combat soaring inflation caused by the ongoing US-Israeli war on Iran.

The 25 basis point hike, announced on Thursday, was widely anticipated by analysts and investors.

Inflation in the 21-country euro area surged to 3.3% in August 2026, up from 2.9% in July, exceeding the ECB's 2% target rate for the third consecutive month.

The conflict in the Middle East continues to drive inflation pressures, with prices set to remain above target for an extended period, according to the ECB.