Frankfurt: The European Central Bank (ECB) decided Thursday to raise its main interest rate by a quarter of a percentage point from 2% to 2.25%. This marks the first rate hike since September 2023 and comes as a response to the economic repercussions of the war in Iran.

According to Yemen News Agency, the bank emphasized that "the war in the Middle East is generating inflationary pressures," and warned that "the economic outlook remains uncertain." The ECB's decision reflects its efforts to address these pressures and stabilize the Eurozone economy.

The bank forecasts inflation across the Eurozone to rise to 3% in 2026. It is expected to stabilize at 2.3% in 2027 before reaching the bank's target level of 2% in 2028. In addition to the main interest rate hike, the ECB also raised the interest rate on refinancing operations by a quarter of a percentage point to 2.4%, while the interest rate on the marginal lending facility increased to 2.65%.