ECB Raises Interest Rates Amid Ongoing Inflation Risks

The European Central Bank (ECB) raised its key interest rates by 25 basis points on Thursday, marking its second rate hike this year amid rising inflationary pressures.

The decision was made in view of the ongoing geopolitical tensions and high energy prices, which are contributing to higher inflation risks. The ECB now expects headline inflation to average 3 percent in 2026, 2.5 percent in 2027, and 2.1 percent in 2028.

Despite the rate hike, the ECB remains cautious about its future path, insisting on a meeting-by-meeting approach. The central bank is closely monitoring any possible second-round effects from higher energy prices but has not seen significant evidence of such effects so far.