ECB Raises Key Rates to 2.25%, Warns Energy Shocks Threaten 2% Inflation Target

According to its June meeting minutes released July 9, the European Central Bank raised key rates to 2.25% while acknowledging energy shocks as an unavoidable factor, citing risks that sustained high energy prices would push mid-term inflation above its 2% target.

The central bank stated in the minutes that prolonged high energy prices risk embedding the shock into broader inflation and medium-term inflation expectations through second-round effects, increasing the risk of lasting damage to the inflation outlook.