European Central Bank Raises Interest Rate to 2.5%

The European Central Bank raised interest rates by a quarter of a percentage point on Thursday, marking its second increase this year, in an effort to curb inflationary pressures stemming from rising energy prices amid the war in the Middle East.

The bank raised its deposit rate from 2.25% to 2.5%, as concerns mounted over the transmission of higher oil and gas prices to goods and services prices in the euro area.

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The decision came after inflation in the euro area rose to 3.3% in August, exceeding the ECB’s 2% target, as energy supply disruptions pushed oil prices above $100 per barrel.