ECB raises interest rates as Iran war fuels inflation
The European Central Bank has raised interest rates for the first time since 2023, citing rising inflation linked to the ongoing war in Iran.
The ECB increased its main deposit rate from 2% to 2.25%, with financial markets expecting further hikes by next spring, News.Az reports, citing The Guardian.
Eurozone inflation rose to 3.2% in May 2026, up from 3% in April, as the conflict in the Middle East continues to drive up energy and production costs.
According to the report, policymakers are concerned that higher oil prices, which remain above $90 per barrel, will push manufacturers and retailers to raise prices further in the coming months.
The central bank had previously held rates steady, anticipating a potential peace agreement between the United States and Iran, but continued geopolitical uncertainty has maintained inflationary pressure.
ECB President Christine Lagarde previously signalled that borrowing costs may need to rise further to contain inflation and stabilise price levels across the eurozone.
By Leyla Şirinova
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