{"id":2393,"date":"2023-03-16T12:02:50","date_gmt":"2023-03-16T17:02:50","guid":{"rendered":"https:\/\/embarrdowns.com\/ecb-delivers-50bps-rate-hike-despite-market-turmoil\/"},"modified":"2023-03-16T12:02:51","modified_gmt":"2023-03-16T17:02:51","slug":"ecb-delivers-50bps-rate-hike-despite-market-turmoil","status":"publish","type":"post","link":"https:\/\/embarrdowns.com\/ecb-delivers-50bps-rate-hike-despite-market-turmoil\/","title":{"rendered":"ECB Delivers 50bps Rate Hike Despite Market Turmoil"},"content":{"rendered":"

On Thursday, the European Central Bank (ECB) delivered a 50 basis points (bps) rate hike, despite the recent turmoil in the banking sector.[0]<\/a><\/sup> ECB President Christine Lagarde stated that inflation is projected to remain too high for too long, and the Governing Council decided to increase the three key ECB interest rates by 50 basis points, in line with its determination to ensure the timely return of inflation to the 2% medium-term target.[1]<\/a><\/sup><\/p>\n

The ECB’s revised inflation expectations show headline inflation averaging 5.3% this year, followed by 2.9% in 2024. The bank also revised up its forecasts for 2024 and 2025, and raised its growth forecasts for the single currency bloc, now seeing GDP growth of 1% this year.[2]<\/a><\/sup><\/p>\n

Simultaneously, underlying cost pressures remain powerful.[3]<\/a><\/sup> Inflation excluding energy and food continued to increase in February and ECB staff expect it to average 4.6% in 2023. In the following years, it is expected that the rate will decrease to 2.5% in 2024 and 2.2% in 2025 due to the waning of upward pressures from past supply shocks and the reopening of the economy and the further restriction of monetary policy which will reduce demand.[3]<\/a><\/sup><\/p>\n

The Governing Council is paying close attention to the current market stress and is prepared to take action if needed in order to maintain price stability and financial stability in the euro zone.[4]<\/a><\/sup> The ECB’s policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy.[5]<\/a><\/sup><\/p>\n

Investors had been betting that the ECB might unveil a smaller, quarter-point rate increase on Thursday after last week\u2019s turmoil in the U.S. banking sector spread to Europe.[6]<\/a><\/sup> However, inflation data support ongoing hawkish rhetoric at the ECB and the bank still has a fight on its hands in this regard.[0]<\/a><\/sup> The ECB will only consider future rate increases if it is confident that such action will not negatively affect the financial sector.[0]<\/a><\/sup><\/p>\n

Following Credit Suisse’s announcement that it would take up to 50bn Swiss francs (\u00a344bn) from the Swiss National Bank in what it called \u201cdecisive action\u201d to strengthen its liquidity, the ECB reassured that the euro area banking sector is resilient, with strong capital and liquidity positions.[7]<\/a><\/sup><\/p>\n

The banking sector in the Euro area is robust, boasting robust capital and liquidity positions.[8]<\/a><\/sup><\/p>\n

0. <\/span>“ECB Delivers 50bps Hike Despite Banking Sector Woes, EURUSD Indecisive” DailyFX, 16 Mar. 2023, https:\/\/www.dailyfx.com\/news\/ecb-delivers-50bps-hike-despite-banking-sector-woes-eurusd-indecisive-20230316.html<\/a><\/a><\/p>\n

1. <\/span>“ECB delivers half-point rate hike in face of banking worries” MarketWatch, 16 Mar. 2023, https:\/\/www.marketwatch.com\/story\/european-central-bank-delivers-half-point-hike-to-interest-rates-36cd346b<\/a><\/a><\/p>\n

2. <\/span>“ECB raises rates by 50 basis points, as inflation trumps financial stability fear By Investing.com” Investing.com, 16 Mar. 2023, https:\/\/www.investing.com\/news\/economy\/ecb-raises-rates-by-50-basis-points-as-inflation-trumps-financial-stability-fear-3032496<\/a><\/a><\/p>\n

3. <\/span>“Full statement from the ECB for the March 2023” ForexLive, 16 Mar. 2023, https:\/\/www.forexlive.com\/centralbank\/full-statement-for-the-ecb-20230316\/<\/a><\/a><\/p>\n

4. <\/span>“European Central Bank hikes rates despite market mayhem, pledges support if needed” CNBC, 16 Mar. 2023, https:\/\/www.cnbc.com\/2023\/03\/16\/ecb-rate-decision-march-meeting-lagarde-announces-new-rate-hike.html<\/a><\/a><\/p>\n

5. <\/span>“European Central Bank delivers huge interest rate hike despite banking sector “tensions”” Axios, 16 Mar. 2023, https:\/\/www.axios.com\/2023\/03\/16\/europe-bank-rate-hike-banking<\/a><\/a><\/p>\n

6. <\/span>“ECB Defies Mounting Banking Strains With Half-Point Rate Rise” The Wall Street Journal, 16 Mar. 2023, https:\/\/www.wsj.com\/articles\/ecb-raises-rates-by-half-point-despite-mounting-banking-stress-41c8bae<\/a><\/a><\/p>\n

7. <\/span>“Credit Suisse stock tumbles, fueling more concerns about banking” CBS News, 16 Mar. 2023, https:\/\/www.cbsnews.com\/news\/credit-suisse-silicon-valley-bank-svb-banking\/<\/a><\/a><\/p>\n

8. <\/span>“European Central Bank raises rates by 50 basis points” Seeking Alpha, 16 Mar. 2023, https:\/\/seekingalpha.com\/news\/3948180-european-central-bank-raises-rates-by-50-basis-points<\/a><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

On Thursday, the European Central Bank (ECB) delivered a 50 basis points (bps) rate hike, despite the recent turmoil in the banking sector.[0]<\/a><\/sup> ECB President Christine Lagarde stated that inflation is projected to remain too high for too long, and the Governing Council decided to increase the three key ECB interest rates by 50 basis points, in line with its determination to ensure the timely return of inflation to the 2% medium-term target.[1]<\/a><\/sup><\/p>\n

The ECB’s revised inflation expectations show headline inflation averaging 5.3% this year, followed by 2.9% in 2024. The bank also revised up its forecasts for 2024 and 2025, and raised its growth forecasts for the single currency bloc, now seeing GDP growth of 1% this year.[2]<\/a><\/sup><\/p>\n

Simultaneously, underlying cost pressures remain powerful.[3]<\/a><\/sup> Inflation excluding energy and food continued to increase in February and ECB staff expect it to average 4.6% in 2023. In the following years, it is expected that the rate will decrease to 2.5% in 2024 and 2.2% in 2025 due to the waning of upward pressures from past supply shocks and the reopening of the economy and the further restriction of monetary policy which will reduce demand.[3]<\/a><\/sup><\/p>\n

The Governing Council is paying close attention to the current market stress and is prepared to take action if needed in order to maintain price stability and financial stability in the euro zone.[4]<\/a><\/sup> The ECB’s policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy.[5]<\/a><\/sup><\/p>\n

Investors had been betting that the ECB might unveil a smaller, quarter-point rate increase on Thursday after last week\u2019s turmoil in the U.S. banking sector spread to Europe.[6]<\/a><\/sup> However, inflation data support ongoing hawkish rhetoric at the ECB and the bank still has a fight on its hands in this regard.[0]<\/a><\/sup> The ECB will only consider future rate increases if it is confident that such action will not negatively affect the financial sector.[0]<\/a><\/sup><\/p>\n

Following Credit Suisse’s announcement that it would take up to 50bn Swiss francs (\u00a344bn) from the Swiss National Bank in what it called \u201cdecisive action\u201d to strengthen its liquidity, the ECB reassured that the euro area banking sector is resilient, with strong capital and liquidity positions.[7]<\/a><\/sup><\/p>\n

The banking sector in the Euro area is robust, boasting robust capital and liquidity positions.[8]<\/a><\/sup><\/p>\n

0. <\/span>“ECB Delivers 50bps Hike Despite Banking Sector Woes, EURUSD Indecisive” DailyFX, 16 Mar. 2023, https:\/\/www.dailyfx.com\/news\/ecb-delivers-50bps-hike-despite-banking-sector-woes-eurusd-indecisive-20230316.html<\/a><\/a><\/p>\n

1. <\/span>“ECB delivers half-point rate hike in face of banking worries” MarketWatch, 16 Mar. 2023, https:\/\/www.marketwatch.com\/story\/european-central-bank-delivers-half-point-hike-to-interest-rates-36cd346b<\/a><\/a><\/p>\n

2. <\/span>“ECB raises rates by 50 basis points, as inflation trumps financial stability fear By Investing.com” Investing.com, 16 Mar. 2023, https:\/\/www.investing.com\/news\/economy\/ecb-raises-rates-by-50-basis-points-as-inflation-trumps-financial-stability-fear-3032496<\/a><\/a><\/p>\n

3. <\/span>“Full statement from the ECB for the March 2023” ForexLive, 16 Mar. 2023, https:\/\/www.forexlive.com\/centralbank\/full-statement-for-the-ecb-20230316\/<\/a><\/a><\/p>\n

4. <\/span>“European Central Bank hikes rates despite market mayhem, pledges support if needed” CNBC, 16 Mar. 2023, https:\/\/www.cnbc.com\/2023\/03\/16\/ecb-rate-decision-march-meeting-lagarde-announces-new-rate-hike.html<\/a><\/a><\/p>\n

5. <\/span>“European Central Bank delivers huge interest rate hike despite banking sector “tensions”” Axios, 16 Mar. 2023, https:\/\/www.axios.com\/2023\/03\/16\/europe-bank-rate-hike-banking<\/a><\/a><\/p>\n

6. <\/span>“ECB Defies Mounting Banking Strains With Half-Point Rate Rise” The Wall Street Journal, 16 Mar. 2023, https:\/\/www.wsj.com\/articles\/ecb-raises-rates-by-half-point-despite-mounting-banking-stress-41c8bae<\/a><\/a><\/p>\n

7. <\/span>“Credit Suisse stock tumbles, fueling more concerns about banking” CBS News, 16 Mar. 2023, https:\/\/www.cbsnews.com\/news\/credit-suisse-silicon-valley-bank-svb-banking\/<\/a><\/a><\/p>\n

8. <\/span>“European Central Bank raises rates by 50 basis points” Seeking Alpha, 16 Mar. 2023, https:\/\/seekingalpha.com\/news\/3948180-european-central-bank-raises-rates-by-50-basis-points<\/a><\/a><\/p>\n","protected":false},"author":3,"featured_media":2392,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47],"tags":[],"_links":{"self":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/2393"}],"collection":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/comments?post=2393"}],"version-history":[{"count":0,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/2393\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media\/2392"}],"wp:attachment":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media?parent=2393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/categories?post=2393"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/tags?post=2393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}