ECB raises interest rates to fight off inflation jump
The central bank also lifted its growth and inflation forecasts as it warned that Middle East conflict is keeping price pressures elevated.
- On Thursday, the European Central Bank raised its key deposit facility rate to 2.5%, marking its second hike since June as it responds to persistent inflationary pressures amid Middle East conflict.
- The eurozone, a net energy importer, has seen inflation exceed the ECB's 2% target since Middle East conflict threatened commodity transit through the Strait of Hormuz, causing oil prices to spike.
- August data revealed eurozone inflation reached 3.3%, with energy inflation surging to 14.3% from 10.3%; core inflation fell to 2.4% from 2.5%, while services inflation dropped to 3% from 3.3%.
- Investors remain divided over the ECB's rate path, with a Deutsche Bank survey showing no consensus about where the central bank's hiking cycle will ultimately sit.
- Economists debate whether this move marks the start of a protracted tightening cycle, while the Federal Reserve, Bank of England, and Bank of Japan prepare for their own rate decisions in coming weeks.
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In September, the ECB raises the key interest rate. This affects the room for manoeuvre of banks - and savers.
The European Central Bank (ECB) increased the three representative interest rates for the second time this year by 25 basis points on Thursday, and warned that the Middle East war continues to fuel inflationary pressures. The decision comes at a time when energy prices rise sharply, Brent oil exceeds $105 per barrel, and European governments' borrowing costs have risen to levels that have not been met for many years.
European Central Bank raises interest rates a quarter point to quell inflation as Iran war drives oil prices higher – WTOP News
FRANKFURT, Germany (AP) — European Central Bank raises interest rates a quarter point to quell inflation as Iran war drives oil prices higher.
The Hungarian National Bank recently began a mini interest rate cut cycle, and in September they will reconsider whether to continue the interest rate cut.
The European Central Bank has raised its main policy rate by a quarter of a percentage point to 2.5%, a decision driven by the rise in inflation due to the rise in oil prices on a war-floor in the Middle East. The institution does not exclude a new screw-up in the coming months. - "The outlook remains uncertain": in the face of the upsurge in energy prices, the ECB is again raising its rates (Economy).
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