ECB Raises Rates Again Amid Middle East Energy Shock

The European Central Bank (ECB) raised interest rates for the second time this year to combat rising inflation, triggered by the Middle East energy shock. The benchmark rate was lifted a quarter percentage point to 2.5 percent, its highest level since March last year.

ECB President Christine Lagarde stated that the decision was 'a no-brainer' due to the conflict in the Middle East continuing to generate inflation pressures and inflation being set to remain above target for an extended period.

Lagarde also mentioned that the near-term economic outlook has improved, with the eurozone economy having withstood the energy shock better than feared. The ECB raised its growth forecasts for this year to 0.9 percent and for next year to 1.4 percent.

Analysts believe Lagarde's tone was 'hawkish', indicating a potential for further rate hikes. However, she declined to give clear guidance on future rate decisions due to an unclear outlook.