(European Central Bank) raises interest rate to 2.50 percent to combat inflation

Berlin, Sept 10 (KUNA) -- The European Central Bank (ECB) announced on Thursday an increase in the interest rate in the eurozone from 2.25% to 2.50%, marking the second hike this year in an effort to curb the inflation wave exacerbated by soaring energy prices amid the war in the region. The Frankfurt-based central bank warned that tensions in the Middle East would intensify price pressures and that inflation could remain above the 2% target for longer than expected, amid concerns over persistent price hikes and slowing economic growth. This move comes as oil and gas prices continue to rise, with disruptions to navigation through the vital Strait of Hormuz affecting fuel and heating costs in Europe. The ECB cautioned that sustained high energy costs could push up prices for transport, food, and other goods, and that inflation could later spill over into wages and prices. Typically, interest rate hikes increase borrowing costs for consumers and businesses, which can dampen demand and help curb inflation. The ECB previously raised interest rates in June for the first time in nearly three years. (End) A.N.J. / M.A.A.