ECB Raises Rates Again Amid Strait of Hormuz Disruption
The European Central Bank (ECB) increased its key interest rates by another quarter of a percentage point on Thursday, September 10. The main interest rate now stands at 2.5 percent, following the second hike in three months.
The move comes as the conflict in the Middle East drives up oil and gas prices. European reference gas prices have risen to €82 per megawatt-hour, more than triple what it was before the war. The increase in energy costs is the sharpest since January 2023, with a 14.3 percent year-on-year rise after the Strait of Hormuz disruption.
The ECB expects inflation to remain above its two percent target for an extended period. Euro area inflation has risen to 3.3 percent last month, up from 2.9 percent in July. The bank's new projections show inflation averaging 3.0 percent this year and 2.5 percent in 2027.