ECB hikes interest rates for first time since 2023 as Iran war ramps-up energy costs
The move follows a rise in euro area inflation to 3.2% in May, with officials warning that energy costs are spreading beyond power and fuel.
- The European Central Bank raised its benchmark rate to 2.25% from 2% on Thursday, becoming the first major central bank to hike rates in response to inflation pressures tied to the Iran war and higher oil prices.
- Inflation in the 21 euro-area countries climbed to 3.2% in May, exceeding the ECB's 2% target, while international benchmark Brent crude surged to just below $92 per barrel from around $73 following Iran's choking off oil flows through the Strait of Hormuz.
- Carsten Brzeski, global chief of macro at ING, noted that "the pass-through of higher energy and input prices to final consumption will be limited" due to consumers' lack of willingness to pay higher prices.
- Contrasting with the ECB's move, the Federal Reserve is expected to keep its key interest rate unchanged when it meets next week under Federal Reserve Chair Kevin Warsh, appointed earlier this year by President Donald Trump.
- Central banks in Australia and the Philippines have already raised rates since the start of the Iran war, signaling a broader global shift as policymakers wrestle with inflation fed by sharply higher oil prices.
205 Articles
205 Articles
The European Central Bank (ECB) has raised its rates for the first time since 2023. Christine Lagarde rejects criticism and considers this decision "necessary" in the face of uncertaintyThe European Central Bank (ECB) has raised its rates on Thursday, noting that it does not intend to tolerate long-term inflation fuelled by the conflict in the Middle East.The Frankfurt Institute has at the same time judged growth in the euro area to be resilient…
Wall Street rides tech rebound, Europe steady after ECB rate hike
The European Central Bank has again raised interest rates because of the increase in inflation due to the Iran War. As the ECB reported in Frankfurt am Main, the deposit rate that is important for savers rises from 2.0 to 2.25%.
Lagarde stopped insisting on the differences between the current inflationary threat and the outbreak of 2022. Decision was unanimous in the Governing Council and no alternatives were discussed. But Miranda Sarmento does not agree.
Price increases: Due to the war in the Middle East, inflation in the eurozone is rising. This calls for a monetary response, according to the European Central…
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