European Central Bank raises interest rates due to war in Middle East

The European Central Bank (ECB), the body responsible for managing the monetary policy of the European Union (E.U.), raised its interest rates to 2.25%, with the aim of countering the rise in inflation caused by the war in the Middle East.

This is the first time the ECB has raised its main rate since the conflict began. Until now, it stood at 2%.

"The Governing Council is committed to setting monetary policy to ensure that inflation stabili[z]es at its 2% target in the medium term," the ECB reported in a statement. "The war in the Middle East is generating inflation pressures, and the decision to raise rates is robust across a range of scenarios mapping out how the shock might evolve and affect the medium-term outlook for the euro area."

In addition, the body chaired by Christine Lagarde aims to reach that 2% inflation target by 2028.

With the rise in interest rates, the ECB is making credit more expensive, which causes consumption and investment to slow down.