finance
ECB raises interest rates for first time since 2023
The European Central Bank increased borrowing costs Thursday, becoming the first G7 central bank to tighten policy amid the Middle East energy crisis. Markets had already priced in the move after oil prices climbed sharply.
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The European Central Bank raised its key interest rate on Thursday, marking its first hike since September 2023 and making it the first G7 central bank to tighten policy in response to the Middle East energy crisis. European stock markets opened higher ahead of the decision, with the Stoxx 600 trading flat after earlier gains of 2 percent.
Asian markets declined, led by a 4 percent drop in Hong Kong and a 2 percent fall in Tokyo.
The declines followed a sell-off in AI-related stocks after Super Micro Computer announced plans to raise $7 billion through stock sales. Oil prices rose to $70 a barrel on Wednesday, up 10 percent for the week, after Euronews reported that the conflict with Iran had effectively closed the Strait of Hormuz to tankers.
Trump warned that Iran would pay the price for stalled negotiations. U.S. consumer prices rose in May at the fastest annual pace in three years. ING noted that despite earlier oil-price weakness, the euro-area yield curve now points to three rate hikes. The euro traded at 158 Japanese yen on the morning of the decision. Gold rose to $3,377 an ounce, supported by the hawkish tone from the ECB.
