European Central Bank raises interest rates ahead of Federal Reserve meeting next week

The European Central Bank raised interest rates by 25 basis points on Thursday, preceding the first FOMC meeting chaired by Kevin Warsh. This decision responds to inflation pressures generated by the war in the Middle East. Additionally, ECB officials are considering a second rate hike as inflation surpasses 3%. Such shifts toward higher rates may tighten financial conditions, which could subsequently impact borrowing costs and the overall valuations of various risk assets across the market.