The European Central Bank (ECB) hiked interest rates for the second time this year on Thursday, meeting expectations as renewed tensions in the Middle East sent energy prices soaring again, threatening to push inflation higher.
The central bank for the 21 eurozone nations lifted its benchmark rate a quarter percentage point to 2.5%, its highest level since March last year.
It was the ECB's second increase this year after policymakers lifted borrowing costs in June for the first time since 2023 in response to the energy shock triggered by the U.S. war with Iran.
"The conflict in the Middle East continues to generate inflation pressures, and inflation is set to remain well above target for an extended period," the ECB said in a statement.
"The outlook remains highly uncertain, with risks to the upside for inflation and to the downside for economic growth," it added.
