ECB Raises Interest Rates Amid Ongoing Iran Conflict

The ongoing conflict in the Middle East has led to a surge in global oil prices, pushing Brent above $100 a barrel. The European Central Bank (ECB) responded by raising interest rates for the second time in three months, tightening capital conditions on which European technology investment depends.

Subsea cables running through the Strait of Hormuz handle around 20% of global internet and financial data flows. While these cables have not yet been directly severed, geopolitical tensions are increasing the risk of accidental damage, which could slow internet access, halt e-commerce activity, and delay financial transactions.

The ECB's Governing Council raised all three key rates at its September 10 meeting in Frankfurt, pushing the deposit facility rate to 2.5%, with the main refinancing rate moving to 2.65% and the marginal lending facility to 2.9%. This is the first back-to-back tightening sequence since 2023.