ECB Raises Interest Rate by 25 Basis Points to 2.25%, First Hike Since September 2023

The European Central Bank (ECB) raised its key interest rate by 25 basis points to 2.25% today, the first increase since September 2023, in response to surging inflation triggered by energy market disruptions from the Middle East conflict.

According to AFP, the ECB lifted its deposit facility rate by 25 basis points to 2.25%. With the potential closure of the Strait of Hormuz threatening to push global energy prices higher, the ECB slightly revised up its inflation forecast while marginally downgrading its economic growth outlook for the year.

The ECB now expects inflation in the eurozone to reach 3.0% in 2024, up from the previous forecast of 2.6%. Meanwhile, the projected GDP growth rate for the year has been adjusted downward to 0.8% from 0.9%.

This rate hike underscores the ECB's commitment to maintaining price stability despite geopolitical uncertainties. The decision reflects growing concerns over sustained energy price pressures and their broader impact on the eurozone economy.

(Compiled by Chen Yen-chun)