The latest flare-up in fighting between the U.S. and Iran probably won't be enough to force the European Central Bank's hand on Thursday, even as energy costs creep higher.

Investors expect the ECB to keep interest rates unchanged at 2.25%. Policymakers raised borrowing costs by a quarter of a point in June, having decided it was time to start trying to curb inflation.

Euro zone inflation cooled to 2.8% last month from 3.2% in May, which has weakened the case for Frankfurt to carry on hiking rates.

Still, there's a case for the ECB to be proactive.

The U.S. has launched attacks on Iran for 11 straight days, disrupting shipping through the Strait of Hormuz and sending oil prices to their highest level in more than a month.

Investors are worried that the fracturing of the cease-fire between the two countries will encourage central banks to tighten, which has weighed on U.S.-listed tech stocks in recent trading sessions.

Write to George Glover at george.glover@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

July 22, 2026 12:15 ET (16:15 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.