How Iran could make your credit rate more expensive. ECB decisions are no longer made in Frankfurt. They are taken in the Strait of Hormuz
An interest rate hike will most likely be the European Central Bank's next move, “although it is too early to say when it will start,” François Villeroy de Gallo, a member of the ECB's Governing Council and France's central banker, said on Thursday.
Villeroy said the sharp rise in energy prices was affecting inflation fundamentals in the euro zone and in France.
In this context, Villeroy said that the next change in ECB interest rates “is very likely to be upward”, speaking at the Sciences Po university in Paris.
“It is clear that we have the capacity to act when and in any way necessary,” Villeroy added.
In his view, investors have revised upward their forecasts for key interest rates, with “two to three rate hikes expected by the end of the year”
Any increase in ECB interest rates translates into higher rates for those who have loans in euros with variable interest rates.
“The transmission of this war in the economy is done in the following way: fuel becomes more expensive, then transport, then food, after which inflation increases and interest rates rise. Well, this does not mean that the war is not transferred to other areas of the economy. But from my point of view it is important to see when these things propagate. Or what is the timing”, explained in a discussion with HotNews the chief economist of BRD, Florian Libocor.
On fuel, the impact is visible in a few days. For food, it's probably up to two months. And on interest, through inflation, on the matter of one quarter to two quarters; 6-7 months, he says.
“You will feel the pressure on repayment, because there will be higher rates and higher interest rates. We are talking about the variable ones. Those with fixed interest rates are the lucky ones,” Libocor explained.
What's happening now: The ECB expects inflation to rise to 3.1% in the second quarter of 2026 as energy prices rise due to the war in the Middle East. Crude oil prices surged 84% since December 18, 2025, rising to around $110 a barrel after US and Israeli attacks on Iran
if the conflict drags on and oil prices remain high, inflationary pressure becomes so great that the ECB is forced to raise interest rates — even if that means sacrificing economic growth
If the ECB increases: the cost of loans in euros goes up, the NBR will be forced to be tougher for longer.
In the event of a geopolitical escalation in Iran (low probability at the time of writing), inflation jumps above 3.5–4%.
The ECB's decision could lead to aggressive increases in the key interest rate (0.5 pp or more).
Impact in Romania:
- NBR forced to react harshly
What to watch:
- Brent oil (below $80 → calm, above $120 → high risk)
- Core inflation (if it stays above 3% is a problem
- Salaries in the euro area. If it accelerates, the ECB may become aggressive
