ECB raises rates for first time since 2023 as Iran war drives inflation higher - Cryptopolitan

Crypto Insight Summary: * The ECB raised its deposit rate 25 basis points to 2.25% on June 11, its first hike since September 2023, citing inflation pressure from the war in the Middle East. * Eurozone inflation hit 3.2% in May, with energy prices up 10.9% year on year. * This makes the ECB the first major central bank to tighten in response to the Iran energy shock. **On Thursday, the European Central Bank increased its deposit rate by 25 basis points to 2.25% in its first rate hike since September 2023. The escalation of the war in the Middle East sent inflation within the eurozone significantly above the bank’s target of 2%.** The ECB has become the first major central bank to tighten monetary policy because of the energy shock arising from the US-Israeli war against Iran. The conflict, which began in late February, has effectively shut down the Strait of Hormuz, a chokepoint that previously handled roughly 20% of global oil and gas shipments, [as Cryptopolitan reported](https://www.cryptopolitan.com/eurozone-inflation-spikes-to-2-5-pushed-by-high-energy-prices/) in March when eurozone inflation was tracking at 2.5%. In May, inflation in the 21 countries of the eurozone rose 3.2 percent on an annual basis while the price of energy recorded an increase of 10.9 percent. Excluding energy and food prices, it amounted to 2.5 percent in May up from 2.2 percent in April indicating the current price pressures go beyond just energy prices. ECB staff now expect headline inflation to average 3.0% in 2026, an increase from their March forecast of 2.6% and subsequently fall to 2.3% in 2027 and hit the target rate of 2% in 2028. In 2028, they were unchanged at 1.5 percent. Crypto Insight Analysis: Direction: Bearish BTC / Bearish ETH Impact: Major Impact Horizon: Mid-term (1-8 weeks) Reasoning: ECB rate hike and Middle East conflict drive risk-off sentiment, pressuring crypto markets.