ECB raises eurozone interest rates as Iran war stokes inflation
Summary
The European Central Bank (ECB) raised interest rates for the first time since 2023 to tackle rising inflation linked to the war in Iran. The ECB increased its main deposit rate from 2% to 2.25% and expects to raise rates further by next spring to control price growth in the eurozone.Key Facts
- The ECB raised its main deposit interest rate from 2% to 2.25%.
- Eurozone inflation rose to 3.2% in May 2026, up from 3% in April.
- The war in Iran has contributed to higher inflation by increasing costs for manufacturers and retailers.
- Oil prices remain above $90 a barrel, higher than about $70 before the war.
- Financial markets expect two more ECB interest rate increases by next spring.
- The ECB delayed rate hikes in 2022, hoping for a peace deal between President Donald Trump and Iran.
- No peace deal has been reached so far, increasing inflation risks.
- ECB President Christine Lagarde said raising borrowing costs is needed to control inflation.
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