The European Central Bank raises interest rates by half a point in the face of banking concerns

The European Central Bank said last month it planned to raise interest rates by 50 basis points at a meeting on Thursday, but that came into doubt after pressure on struggling Swiss lender Credit Suisse raised concerns about the eurozone bank’s exposure.

Credit Suisse shares steadied after the bank said early Thursday that it would tap $54 billion in credit from the Swiss National Bank.

The ECB said that future moves will depend on economic and financial data given the “high level of uncertainty”. The ECB said it was watching the current market tensions closely and stood “ready to respond as necessary to maintain price stability and financial stability in the euro area.” The European Central Bank said that the banking sector in the euro area is “resilient, with strong capital and liquidity.”

“The decision not to give any new forward guidance on interest rates may be seen as dovish, given that many policymakers have said in recent weeks that they expect to raise interest rates further in May and beyond,” said Jack Allen Reynolds, Vice Chairman. Eurozone economist in Capital Economics, in a note. “But the lack of forward direction may reflect the growing divisions in the board.”

Analysts said the European Central Bank faces a dilemma at Thursday’s meeting.

Failing to rally after last month’s pledge would have dented the ECB’s credibility, Fouad Razakzadeh, an analyst at Forex.com and City Index, said in a note, but policymakers also seem unwilling to frustrate those who advocate a smaller or no increase. height at all. .

By not providing forward guidance, it delivered “a rate hike as you would have seen it in the circumstances,” he wrote.