Why did the ECB raise interest rates to 2.5%, and what key risk did it highlight in its latest decision?

The ECB raised interest rates to 2.5%—its highest level since March last year—from 2.25% due to rising inflationary pressures, particularly driven by surging energy prices following renewed US-Iran attacks on ships in the Strait of Hormuz. The central bank explicitly warned that 'the risk of higher inflation over the next year has risen' and stated that 'inflation will be longer lasting than we had anticipated', citing energy costs as the biggest driver and flagging potential further increases in food inflation and gas prices due to supply disruptions or a cold winter amid low regional storage levels.

What are the current energy price levels in Europe, and how do they compare to recent historical benchmarks?

Brent crude oil reached $105 per barrel (before settling at $104.5), marking a 3.3% daily rise; British gas prices surged above 203p per therm—the highest since December 2022; and the Dutch wholesale gas price (EU benchmark) exceeded €80 per megawatt hour for the first time since January 2023, with the front-month contract trading at €82.56/MWh—3.4% higher. These spikes coincide with EU gas storage levels at only 67% full, well below the five-year average of 84%, heightening concerns about winter supply shortages.

ECB Raises Interest Rates to 2.5% as Middle East Conflict Drives Energy Inflation

Sep 10, 2026

The European Central Bank raised its benchmark rate to 2.5%, warning that Middle East hostilities are pushing up oil and gas prices, thereby increasing inflation risks across the eurozone.

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