European Central Bank raises benchmark interest rate for the first time in 3 years

The European Central Bank (ECB) raised its benchmark interest rate by 0.25 percentage points on the 11th (local time), bringing it to 2.25%. This is the first benchmark rate hike in about three years, since September 2023. The decision was made in response to rising eurozone inflation as international oil prices surged amid the war between the United States, Israel, and Iran. The AP reported that concerns over Iran blocking the Strait of Hormuz fueled the rise in oil prices. Brent crude climbed to around $92 per barrel, and May inflation in the 21 countries that use the euro reached 3.2%, exceeding the ECB's target of 2%. However, the ECB's rate hike also carries a significant burden, as it could further increase the possibility of an economic slowdown. The AP reported that this measure may be a shortterm hike intended to signal the market of its commitment to curbing inflation. Next week, the U.S. Federal Reserve, the Bank of Japan, and the Bank of England are also scheduled to announce interest rate decisions in succession.