European Central Bank Raises Interest Rates to Quell Energy-Fueled Inflation

The European Central Bank raised interest rates Thursday to cool inflation that is being fed by high oil prices from the Iran war. The decision was supported by a stronger-than-expected economy that suggests businesses can weather the higher borrowing costs.

The central bank for the 21 EU member countries that use the euro currency raised its benchmark rate by a quarter percentage point to 2.50% at a meeting held in Berlin, away from the bank’s Frankfurt headquarters.

Bank President Christine Lagarde said at her news conference that “the conflict in the Middle East continues to generate inflation pressures, and inflation is set to remain well above target for an extended period.”

“The outlook remains highly uncertain, with risks to the upside for inflation and to the downside for economic growth,” she said, adding that the bank would make future rate decisions meeting by meeting based on incoming data. She said the central bank would not commit to any particular path for rates before seeing the data.