ECB hikes interest rates for first time since 2023 as Iran war ramps-up energy costs
The first hike since 2023 comes as officials warn higher energy costs could keep euro-area inflation above target for months.
- 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.
256 Articles
256 Articles
Frankfurt returns to increase the cost of money, after almost three years, in order to contain inflation due to shocks outside the Eurozone. Orsini (Confindustria): I expected a decrease. So investments at risk. The ECB tightens the credit. Although the knot already pushes enough to leave the mark on the real economy. Christine Lagarde announced the first rise of the rates from September 2023: +0.25 to 2.25%. A decision presented as a signal, bu…
For the first time in three years, the European Central Bank has raised the key interest rates by 0.25 percentage points. This should also increase the cost of government bonds. Euro states are threatened with billions of additional costs to finance their debt orgies. Three factors determine the costs for public budgets over a short period of time with regard to the operation of government debt: on the one hand, the level of debt itself, then th…
The fight for savings is on. Banking has begun to update its commercial catalogue to the thread of the movements of the European Central Bank (ECB), which on Thursday has applied an increase in interest rates from 25 basis points, to 2.25%. Trade Republic, which after knowing the decision has announced an improvement of the terms of its remunerated account and raises from 2% to 2.27% the profitability that it offers to the customers who hired th…
To what extent has the European Central Bank raised its deposit rate? The European Central Bank has decided to raise interest rates after a lengthy pause. This move was a response to the rapid rise in prices triggered by the outbreak of a major war in Iran, RBC-Ukraine reports, citing Deutsche Welle. The Frankfurt-based regulator raised its base deposit rate by 0.25 percentage points, now standing at 2.25%, a historic moment for the market. The …
ECB raises interest rates as inflation bites
The European Central Bank raised interest rates on Thursday, becoming the first of the world’s major developed economies to do so since the outset of the Iran war. Frankfurt cited “a broadening of inflation throughout the economy.” A spike in US inflation is also putting pressure on the Federal Reserve — and its new chair — to hike the cost of borrowing this year. Policymakers worldwide are in a bind: The World Bank projected Thursday that the I…
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