Which Central Banks Raised Rates on War-Driven Inflation? ECB, SNB, and Taiwan's Decisions in 2026

By mid-2026, the Iran war had sent energy prices surging, pushing eurozone inflation to 3.2% and forcing central banks to confront a stark choice: tighten monetary policy or wait out what they hoped was a transitory shock. The European Central Bank (ECB) chose to act, becoming the first major central bank to raise interest rates in response to the conflict. But the Swiss National Bank (SNB) and Taiwan's Central Bank of the Republic of China (CBC) both held their fire, judging that the economic fallout was too uncertain to justify a hike.

The ECB: A Decisive — and Unanimous — Pivot to Tightening

After holding rates steady at 2.00% for seven consecutive meetings, the ECB's Governing Council unanimously voted to raise all three key interest rates by 25 basis points on June 11, 2026 . The deposit facility rate went to 2.25%, the main refinancing rate to 2.40%, and the marginal lending rate to 2.65% . The decision was explicitly tied to the war. "The war in the Middle East is generating inflation pressures," the ECB stated, "and the decision to raise rates is robust across a range of scenarios" . The hike ended a three-year pause on rate increases and marked a clear pivot back to tightening after eight rate cuts in 2024–2025 . Eurozone inflation had climbed to 3.2% in May 2026, driven wholly by higher energy prices, with the ECB's baseline projecting headline inflation averaging 3.0% for the full year . Markets quickly priced in one to two further hikes through early 2027 .

The Swiss National Bank: Holding at Zero with a Currency Shield

The SNB took a deliberately different path. It kept its policy rate at 0% at both its March and June 2026 meetings, extending what was already the fourth consecutive hold since mid-2025 . The bank acknowledged that higher energy prices from the Strait of Hormuz disruption had pushed up short-term inflation — its June forecast raised the 2026 inflation projection from 0.5% to 0.6% . But the SNB concluded that medium-term inflationary pressures remained "virtually unchanged" . Its primary tool for managing the geopolitical shock was not a rate hike but currency intervention. "Given the conflict in the Middle East, the SNB's willingness to intervene in the foreign exchange market has increased," it said, aiming to prevent a rapid, disruptive appreciation of the Swiss franc that could damage the export-reliant economy . Safe-haven flows had already boosted the franc since the war began, partly offsetting the upward pressure of higher oil prices on Swiss inflation .

Taiwan's Central Bank: A Tightening Bias, but No Action

Taiwan's CBC held its benchmark discount rate at 2.00% at both its March and June 2026 quarterly meetings, extending a pause that had lasted for nine straight quarters going back to March 2024 . The decision was unanimous and matched the predictions of all 28 economists surveyed by Bloomberg and all 29 surveyed by LSEG . Like the SNB, the CBC revised its inflation forecast upward — it raised its 2026 CPI projection from 1.63% to 1.80%, estimating that the conflict-driven rise in oil prices would add 0.52 percentage points to inflation . The bank explicitly warned that the war posed a key downside risk to the global and domestic economy and signaled it was leaning toward a "tightening bias" . Yet it chose to wait, wanting to assess the full economic fallout before committing to a rate move . The decision was also supported by Taiwan's booming tech exports — the bank sharply raised its 2026 GDP growth forecast to 7.28% — which gave it room to hold .

Key Takeaways

• Only the ECB has actually raised rates among the three central banks scrutinized here, doing so by 25 basis points on June 11, 2026, in a unanimous vote tied directly to the Middle East conflict.
• The SNB and the CBC both held steady at 0% and 2.00% respectively, despite acknowledging that energy prices were pushing inflation higher in the short term.
• The SNB favored currency intervention over rate changes as its main policy response, reflecting Switzerland's unique exposure to safe-haven currency inflows.
• Taiwan's CBC raised its inflation forecast and adopted a tightening bias but opted to preserve policy space, supported by strong export-led growth in tech manufacturing.
• The divergence in policy responses underscores how different economic structures — from safe-haven currency dynamics to tech-export strength — shaped each central bank's calculation of whether war-driven inflation was a problem worth fighting with higher rates.

As of mid-2026, these three central banks illustrate the range of possible responses: one hiked, two held, and all three made their decisions with an eye on a conflict whose duration no forecaster could confidently predict.