European Central Bank (ECB) President Christine Lagarde has defended a decision to increase interest rates, saying it is "robust across three different scenarios".
The ECB announced today that it is raising rates by 0.25 percent for the first time in three years due to the ongoing war in the Middle East. It is the bank's first rate hike since 2023, when it raised rates in response to surging energy prices caused by Russia's full-scale invasion of Ukraine.
"The war is generating inflation pressures, and the decision to raise rates is robust across a range of scenarios mapping out how the shock might evolve and affect the medium-term outlook for the euro area," Lagarde journalists at a briefing on Thursday.
The effects of the Middle East conflict that started in February have reverberated across Europe. The on-off closure of the Strait of Hormuz has sent oil and gas prices rocketing, with a huge impact on European importers.
The ECB's rate hike marks a clear reversal of the easing cycle that had defined the bank's approach throughout much of 2025. Eurozone inflation hit 3.2 percent in May, its highest reading since September 2023, driven by a 10.9 percent surge in energy prices.
