Frankfurt, 10 September 2026 (dpa/MIA) - The European Central Bank (ECB) is raising its key deposit rate by 0.25 points to 2.5%, the bank's governing council said on Thursday, announcing the second rate hike this year in a bid to combat inflation fuelled by the Iran war.

Economists had widely expected the ECB to raise the deposit rate, which is important for savers and banks, from 2.25%.

An oil price shock triggered by the war on Iran has pushed inflation higher, with motorists feeling the impact at petrol stations and homeowners facing higher heating oil prices. There is no sign of a resolution to the conflict in the Gulf.

Consumer prices in the eurozone were 3.3% higher in August than a year earlier, the highest inflation rate since September 2023 and well above the ECB's medium-term target of 2%.

In Germany, high energy prices pushed inflation to 2.9% in August, final figures reported on Thursday showed.

Higher interest rates can help curb inflation by making borrowing more expensive and reducing demand. Savers can benefit from higher rates if banks pass them on, while higher borrowing costs weigh on investment.

MIA file photo