Brussels, (Unib Rashid) – The European Central Bank has, as expected, announced a further interest rate increase, by 25 basis points to 2.5 per cent. This is the second rate hike since the start of the Middle East conflict at the end of February.

An interest rate increase is a tool to bring inflation back to the desired level. The central bank aims for an inflation rate of 2 per cent in the medium term.
However, due to the Iran conflict, inflation will “remain well above the target for a longer period,” says the ECB. “The outlook remains highly uncertain, with upside risks to inflation and downside risks to economic growth.”