ECB Raises Interest Rates Amid Ongoing Energy Price Shock

The European Central Bank (ECB) has raised its key interest rate by 0.25% to combat inflation, but it remains uncertain whether this move will be enough to counter the impact of rising energy costs.

Energy prices have surged 190% since the start of the year, with Brent crude climbing above $100 a barrel due to ongoing tensions in the Middle East.

The ECB's decision is aimed at preventing inflation from becoming entrenched and to curb expectations of future price increases.

Core inflation, which excludes energy prices, actually eased to 2.4% in August from 2.5%, suggesting that the shock has not yet translated into higher domestic prices.