ECB Readies Second Rate Hike as Iran War Fuels Inflation and Growth
The European Central Bank (ECB) is set to raise borrowing costs for the second time since the Iran war sent energy prices soaring. The move comes as inflation remains locked above target and the region's economy proves surprisingly robust.
In its upcoming decision, the ECB will lift the deposit rate by a quarter-point to 2.5% on Thursday, according to all but one analyst in a Bloomberg poll. This increase is seen as a response to stronger inflation pressure alongside faster growth in the 21-nation euro area.
New quarterly forecasts from the ECB are expected to bolster the case for action, pointing to higher energy prices due to the ongoing conflict with Iran. The region's economy has shown resilience despite these challenges, leading to a reevaluation of interest rates by policymakers.