ECB Raises Policy Rate to Combat Inflation Amid Ongoing Middle East Tensions
The European Central Bank (ECB) has raised its policy rate for the second time this year, increasing it by a quarter point to 2.50%. The move aims to combat inflation triggered by the Iran war.
According to ECB President Christine Lagarde, the near-term growth outlook has improved compared to previous projections, with private consumption and public spending showing resilience in the face of energy headwinds.
The economy proved resilient in the second quarter, with broad-based growth across countries and sectors. This trend is expected to continue into the third quarter.
Lagarde noted that inflation pressures remain high due to the ongoing Middle East conflict, which will likely keep inflation above target for an extended period.
She also emphasized that the economic outlook remains highly uncertain, with risks to the upside for inflation and to the downside for economic growth.