European Central Bank raised interest rates by 50 basis points, despite financial market chaos. Read more
On Thursday morning, after days of turmoil in markets, financial investors had seen a 50 per cent chance of a smaller, 25 basis point move by the ECB. They have also dialled down expectations for future moves, forecasting the peak rate at 3.25 per cent, below the 4.1 per cent priced last week.
The key worry for the ECB is that monetary policy works via the banking system, and a full blown financial crisis would make its policy ineffective.Article content Inflation is seen averaging 5.3 per cent this year, 2.9 per cent in 2024 and 2.1 per cent in 2025, the ECB said, adding that these projections were finalized before the current turmoil.
Some economists also argued that the ECB has plenty of instruments to fight market stress, and so had not needed to sacrifice the rate move to keep financial assets buoyant.
France Dernières Nouvelles, France Actualités
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ECB hikes interest rate 50 basis points despite bank chaosEuropean Central Bank raised interest rates by 50 basis points, despite financial market chaos. Read more
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