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ECB Hikes Interest Rates Amid Inflation Pressures from Middle East War

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The European Central Bank's Governing Council decided to raise its three key interest rates by 25 basis points at its June meeting on Thursday, citing inflationary pressures stemming from the war in the Middle East.

As widely expected, the interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will increase to 2.25%, 2.40% and 2.65%, respectively, effective June 17.

The central bank said the outlook remains uncertain, with the war's full implications for medium-term growth and inflation contingent on the length and intensity of the energy price shock, among other factors. "With today's decision, the Governing Council remains well positioned to navigate the uncertainty caused by the war."

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