ECB raises interest rates for first time since 2023 amid Iran-war inflation pressures

The European Central Bank announced a quarter-point rate hike on Thursday, bringing its key interest rate to 2.25 per cent as the Iran war continues to blow inflation off target.

The European Central Bank on Thursday became the first major central bank to raise interest rates in response to the Iran war as policymakers around the world including…

A growing number of economists have spoken out against lifting rates, warning it may not tackle inflation that stems mainly from a shortage of energy supplies rather than strong consumer demand.

U.S. Fed expected to hold rate unchanged when it meets next week

FRANKFURT, Germany — The European Central Bank on Thursday became the first major central bank to raise interest rates in response to the Iran war as policymakers around the world including new U.S. Federal Reserve Chair Kevin Warsh wrestle with how to confront the inflation fed by sharply higher oil prices. The ECB’s rate-setting council raised its benchmark rate to 2.25 percent from 2 percent, where it had been for a year. The move comes ahead of rate-setting meetings next week at the Fed, the Bank of Japan and the Bank of England. Oil prices have risen sharply due to Iran choking off the flow of crude oil through the Strait of Hormuz, the sea passage for a fifth of the world’s oil and fuel products during normal times. Raising rates aims to dampen the consumer price inflation fed by higher costs for products made from crude such as gasoline, diesel fuel, cooking gas and heating oil. International benchmark Bent crude was trading just below $92 per barrel on Thursday, up from around $73 on the eve of the war. That has helped push inflation to 3.2 percent in May in the 21 countri

The European Central Bank also raised its inflation forecasts and cut its growth outlook.