European Central Bank Raises Rates in Bid to Quell Inflation

The European Central Bank raised interest rates on Thursday to the highest level in more than a year, as officials try to quell inflation driven by the war in the Middle East.Policymakers at the bank, which sets rates for the 21 countries that use the euro, lifted their key rate a quarter point, to 2.5 percent.It was the second increase since the United States and Israel attacked Iran in February, starting a war that has sent global energy prices sharply higher.This week, the price of Brent crude oil, the international benchmark, climbed above $100 a barrel, and European natural gas prices are more than double what they were before the war.“The conflict in the Middle East continues to generate inflation pressures,” Christine Lagarde, the president of the central bank, said at a news conference in Berlin.The world’s major central banks are under pressure to respond to rising inflation with higher interest rates amid jitters in the bond market, where investors are alert to rising debt and widening deficits by some of the world’s richest nations.

In recent weeks, government bond yields have risen to levels not seen in more than a decade.Next week, policymakers at the U.S.Federal Reserve, the Bank of England and the Bank of Japan will meet to set interest rates.

In the United States, traders have increased bets that the Fed will lift rates this year, potentially as soon as next week.In Japan, officials are widely expected to increase rates next week.

In Britain, traders are betting on a rate increase by the end of the year.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access.If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe....