ECB on High Alert as Gulf War Escalation Threatens Eurozone Inflation

Fresh fighting between Iran and the United States has put the European Central Bank (ECB) on high alert ahead of its rate-setting meeting. The conflict, which began two weeks ago, has restricted energy exports through the Strait of Hormuz, a waterway that carries about a fifth of the world's oil and natural gas.

The ECB raised interest rates by a quarter of a percentage point to 2.25% in June, becoming the first major central bank to do so since the near-total closure of the strait. The move was seen as a response to rising inflation, which had eased to 2.8% in June.

The recent escalation of hostilities has raised concerns that eurozone inflation might pick up again, sparking fears among rate setters at the ECB.