ECB raises eurozone interest rates as Iran war stokes inflation

A visitor walks past a giant euro sign inside the headquarters of the European Central Bank in Frankfurt Photograph: Kirill Kudryavtsev/AFP/Getty Images View image in fullscreen A visitor walks past a giant euro sign inside the headquarters of the European Central Bank in Frankfurt Photograph: Kirill Kudryavtsev/AFP/Getty Images ECB raises eurozone interest rates as Iran war stokes inflation European Central Bank increases main deposit rate to 2.25%, with two further rises expected by next spring Business live – latest updates The European Central Bank has raised interest rates for the first time since 2023 in response to higher inflation caused by the war in Iran. The ECB raised its main deposit rate from 2% to 2.25% and financial markets are pricing in two more rises by next spring. Eurozone consumer price inflation rose to 3.2% in May 2026, up from 3% in April, sparking concerns that the conflict in the Middle East will force manufacturers and retailers to push through price increases into the summer and autumn to maintain profit levels. Eurozone hit by first interest rate rise since 2023 as ECB battles inflation – business live Read more The increase in rates will be widely seen as as attempt by the ECB to get a grip on inflation at an early stage after criticism that it delayed rate rises in 2022 amid Russia’s invasion of Ukraine. The central bank has held interest rates level until now in the hope that a peace deal will be signed between Donald Trump and Iran, limiting the need for a rise in interest rates to counter inflationary pressures. However, a deal has so far proved out of reach and oil prices have continued to remain above $90 a barrel, compared with about $70 before the war started. In March, the ECB president, Christine Lagarde, indicated that a rise in the cost of borrowing would be necessary to limit the increase in inflation. Explore more on these topics European Central Bank Eurozone Economics European Union Europe news Share Reuse this content