| The European Central Bank raised interest rates by 0.5 of a percentage point on Thursday, as promised,and calls by investors to dial back policy tightening at least until sentiment stabilises.
ECB boss Christine Lagarde emphasised that the banking sector as a whole was in a “much, much stronger position” than it was at the point of the 2008 financial crisis.In line with its often-repeated guidance, the central bank for the 20 countries that share the euro lifted its deposit rate to 3 per cent, the highest level since late 2008, as inflation is seen overshooting its 2 per cent target through 2025.
“The Governing Council is monitoring current market tensions closely and stands ready to respond as necessary to preserve price stability and financial stability in the euro area,” she said, while adding that the region’s banks had strong capital and liquidity positions.The statement offered no commitments for the future, despite previous calls by a long list of policymakers for more big moves in the fight against inflation.
“But it’s a big caveat, ‘if our baseline was to persist’,” she added, noting that it was currently impossible to determine the future path of interest rates amid “completely elevated” uncertainty stemming from the market ructions.
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