ECB Hikes Rates for First Time in Nearly Three Years on Energy Inflation

The global rate cycle just turned. The ECB raised rates a quarter point — its first hike in nearly three years — citing Iran-related energy costs and upgraded inflation forecasts. Two transmission channels matter for Asia. First, rate differentials: with Europe re-tightening and the Fed on hold at elevated levels, the yen's carry disadvantage hardens, underpinning its slide back past 160. Second, policy cover: if the ECB treats energy inflation as hike-worthy, the BOJ's case for tightening next week strengthens, narrowing room for half-measures. For portfolios, duration risk in global bonds is back and the tightening-plus-expensive-oil combination has historically compressed growth-stock multiples. Watch whether this is a one-off insurance hike or the start of a sequence — Lagarde's scenario of sub-2% inflation by spring is the claim to test.