The European Central Bank (ECB) raised interest rates for the second time this year — a move expected by the market, UNN reports, citing Reuters.
Details
The publication notes that the regulator is seeking to curb rising inflation caused exclusively by higher energy prices due to the war involving Iran.
The sharp rise in oil and natural gas prices caused inflation in the eurozone (which comprises 21 countries) to significantly exceed 3% last month, deviating substantially from the ECB's target of 2%.
The recent escalation of the conflict points to further price pressures, which could eventually affect wage levels as well.
"The outlook remains highly uncertain: there are risks of both higher inflation and slower economic growth," the ECB said in a statement.
ECB President stated that Europe has become more resilient to economic shocks30.06.26, 02:37
The ECB also raised its forecast for economic growth in 2026 to 0.9% (from the June figure of 0.8%) and now expects average inflation to stand at 3.0% this year and 2.5% in 2027.
Following Thursday's increase, the ECB's benchmark deposit rate reached 2.5% — the upper end of the "neutral" range, which officials believe neither restrains nor stimulates economic growth.
Although financial investors expect further rate hikes later this year and in 2027, the ECB is unlikely to rush into its next steps given the ambiguous economic outlook.
Recall
In June the European Central Bank raised its key interest rates for the first time in nearly three years. The reason was accelerating inflation in the eurozone amid rising energy prices due to the war surrounding Iran.