The European Central Bank may need to gradually raise interest rates further to contain inflation before higher fuel costs caused by the Iran war feed into wages and broader prices, ECB policymaker Martins Kazaks told Reuters.
The ECB raised its key interest rate to 2.5% from 2.25% on Thursday, marking its second hike this year. The central bank also warned that inflationary pressures stemming from the conflict in Iran could prove persistent, strengthening expectations for further monetary tightening as early as October.
