Eurozone Interest Rates Hiked to Combat High Energy Prices

The European Central Bank has raised interest rates by a quarter percentage point to combat inflation fueled by high energy prices. The decision was made in response to oil prices exceeding $100 per barrel due to lower tanker traffic through the Strait of Hormuz, which is under threat of Iranian attack.

The benchmark rate for the eurozone economy was increased from 2.25% to 2.50%, with the central bank citing that inflation pressures are set to remain well above target for an extended period.

Inflation in the eurozone came in at 3.3% in August, above the bank's target of 2%. The ECB said it is impossible to say how long shipping restrictions and high oil prices will last, complicating decisions about borrowing costs.