AI Summary

European Central Bank officials said Europe will face an energy price shock for months even after a tentative U.S.-Iran agreement to end the war and reopen the Strait of Hormuz. The conflict in the Middle East has pushed energy prices higher, contributing to core inflation in the euro area. In response, the ECB raised its key interest rate by 25 basis points to 2.25%, marking the first hike since 2023. The rate increase reflects the bank’s effort to counter the inflationary impact of rising energy costs.

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