ECB holds rates at 2 percent amid Iran war inflation risk
The ECB held rates at 2% on Thursday but flagged potential hikes as the Iran war lifts energy costs. Officials expect inflation to approach 4% over the year.
The European Central Bank maintained its primary interest rate at 2% on Thursday, though policymakers signaled that discussions regarding potential hikes could begin as early as next month. The escalating conflict in Iran has triggered a sharp rise in energy costs, posing a significant threat to price stability across the euro zone.
Following military actions involving the United States and Israel, oil and gas prices have surged. This development increases the risk of higher consumer prices and reduced economic momentum for the 21-nation currency bloc, which is heavily dependent on energy imports. Brent Crude Oil reached $119 per barrel on Thursday, with the central bank warning that a scenario where prices hit $150 could necessitate immediate policy tightening.
