The European Central Bank on Thursday raised its benchmark interest rate from 2% to 2.25%, marking its first hike since September 2023 as the Frankfurt-based bank outlined its response to the economic fallout from the conflict in Iran.
"The war in the Middle East is generating inflation pressures," the bank said, warning that "the outlook remains uncertain."
Inflation is forecast to rise to 3% across the eurozone in 2026, before settling at 2.3% in 2027 and hitting the bank's 2% target in 2028.
The interest rate on refinancing operations was raised by 25 percentage points to 2.4%, with the marginal lending facility rate climbing to 2.65%.
