ECB raises eurozone interest rates as Iran war stokes inflation

The European Central Bank raised its main deposit rate to 2.25% from 2% in response to rising eurozone inflation, which reached 3.2% in May 2026, driven by the war in Iran and higher energy costs. This marks the first rate hike since 2023 and signals the ECB's attempt to control inflation early, despite a downward revision of growth forecasts for the eurozone.