ECB to hike rates as Iran war fuels fresh inflation fears
The move follows a jump in oil and bond yields that markets say could keep inflation above target and force more tightening.
- On Thursday, the European Central Bank raised its benchmark deposit rate by 25 basis points to 2.50%, seeking to curb energy-driven inflation triggered by the Iran war.
- Attacks linked to the U.S.-Iran conflict disrupted shipping through the Strait of Hormuz, pushing Brent crude above $100 per barrel and driving eurozone inflation above the bank's 2% target.
- ECB President Christine Lagarde stated that "inflation is set to remain well above target for an extended period," while markets price in additional rate hikes throughout next year.
- Long-Term bond yields have reached levels unseen since before the global financial crisis, raising borrowing costs for tracker mortgage customers and reflecting tightening financing conditions across the eurozone.
- Lagarde confirmed she will remain at the institution until October 31, 2027, as the bank noted the economic outlook remains "highly uncertain" with risks to both inflation and growth.
493 Articles
493 Articles
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