Eurozone inflation hits 3.2% in May, prompting the ECB’s first rate increase since 2023 amid persistent energy price pressures.
The European Central Bank raised its key interest rate by 25 basis points to 2.25%, the first hike since 2023, citing energy-driven inflationary pressures. The move follows a rise in eurozone annual inflation to 3.2% in May from 3.0% in April.
Despite a tentative U.S.-Iran deal to reopen the Strait of Hormuz, ECB officials warned that Europe’s energy price shock will persist for months. The conflict in the Middle East has already pushed energy costs higher, feeding into core inflation and complicating the ECB’s policy response.
The rate hike reflects concerns over inflationary trends, though the central bank signaled that further tightening may depend on incoming data and the duration of energy market disruptions.