ECB Raises Rates as Iran Conflict Fuels Inflation Fears

The European Central Bank (ECB) has raised interest rates for the second time this year in an effort to combat rising inflation. The decision was made on September 10, 2026, with the policy rate increasing to 2.50% from 2.25%. This move comes as a response to the ongoing conflict between the US and Iran, which has caused oil prices to surge above $100 per barrel.

The ECB cited concerns about inflation staying above its 2% target for an extended period. The central bank also raised some of its growth and inflation projections, reflecting the economy's resilience in the face of higher fuel costs. It now expects inflation to reach 3.0% this year, 2.5% in 2027, and 2.1% in 2028.

Financial markets are pricing in one more rate hike this year, followed by another one or two moves next year. However, economists think Thursday's move may be the ECB's last for now, although some see a risk that further tightening may be needed.