ECB raises eurozone interest rates as Iran war stokes inflation

The European Central Bank (ECB) has raised its main deposit rate from 2% to 2.25% in response to rising inflation. This marks the first interest rate increase by the ECB since 2023. Financial markets anticipate two further rate hikes by next spring. Eurozone consumer price inflation reached 3.2% in May 2026, up from 3% in April, with concerns that the conflict in Iran is contributing to these increases. The ECB's decision is seen as an effort to control inflation early, following criticism of delayed rate rises in 2022. The central bank had previously maintained interest rates hoping for a peace deal between Donald Trump and Iran, but this has not materialized, and oil prices remain elevated.

President Donald Trump expressed an unexpected positive view of recent inflation figures, stating, "I love the inflation," despite a 4.2% annual increase in the consumer price index. He attributed rising prices to the Iran war's impact on energy costs and claimed relief is imminent due to a secret military operation moving millions of barrels of oil through the Strait of Hormuz. This stance contrasts with his previous campaign pledge to combat inflation and comes as voters express concern over the economy. Democrats criticized Trump's remarks, with Senate Democratic Leader Chuck Schumer calling it "contempt for you." Energy Secretary Chris Wright, when pressed, stated he would prefer lower inflation. Financial markets reacted cautiously, with U.S. crude oil futures rising on the day of Trump's comments.