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The ECB raises rates by 0.5%. 'The route is unpredictable'


Frankfurt brings the main refinancing rate to 3.50%. The European Stock Exchanges are recovering after the decisions of the ECB and a first negative turn: bonds are up, the euro is down: investors are looking at the absence of indications on future increases. Extraordinary meeting of the Swiss government today on the situation of Credit Suisse. Tajani: 'The ECB is not moving in the right direction' (ANSA)

The ECB has decided to raise interest rates by half a percentage point despite the turbulence affecting the banks,

bringing the rate on main refinancing to 3.50%, that on deposits to 3%, and that on marginal loans to 3%. .75%.

The Central Institute communicates it.

The ECB did not include any reference to the next steps in the press release on today's decision.

E The market cuts its bets on further rate hikes that the ECB will make between now and July by just 15 basis points, when the bullish cycle initiated by Frankfurt should end, in the wake of the absence of indications of new interest rate tightening.

This is reported by Bloomberg, based on money market indicators.

The ECB's decision to raise rates was taken "by a large majority" and "3-4 members of the board" were against it, explained ECB president Christine Lagarde at the press conference, according to whom those who were against it "wanted more time to monitor the situation".

"We have demonstrated in the past" that the ECB can "demonstrate creativity if there is a liquidity crisis, but we don't see it currently", explained the ECB president.

She and she reiterated that Eurozone banks are much stronger, thanks to the Basel 3 rules, the new capital requirements, "the sector is much much stronger than in 2008".

But "we have the tools available that we're always ready to activate when and if needed," she added.

"It is not possible at this moment to determine which path we will take"

with regard to rates, specified the president of the ECB.

And decisions will be made "based on the data."

As far as Credit Suisse is concerned, the exposure of European banks is "limited and there is no concentration", said ECB vice president Luis De Guindos.

In any case, he explained, "we have the tools to provide liquidity if needed". 


The European stock exchanges consolidate the increases towards the end of the session

, with Paris pulling the sprint (+2.1%) in Frankfurt (+1.5%), Milan (+1.5%) and London (+0.9% ) in the wake of Wall Street, where the Nasdaq rounds up to 2% and the S&P 500 rises by 1.1%.

Investors trust in the intervention of some large American banks to secure First Republic Bank while the market, despite the 50 basis point rate hike by the ECB, seems to share the pragmatic attitude behind the decisions on any further hikes , which will be taken according only to the new data.

The European markets are holding up to the impact

of the ECB's decision, which confirmed the rise of 50 basis points despite the turbulence that is shaking the markets and the Credit Suisse crisis.

Milan loses 0.16%, Paris rises by 0.38% and London by 0.05%.


are eyeing the fact that

Frankfurt has withheld any hint of future

rate hikes.

Government bond yields have thus turned downwards, with that of the BTP falling below 4.1%, to 4.07%, while the spread remains around 195 basis points.

The euro also fell, trading at 1.057 against the dollar, while the European banking sector also suffered, with the sector's Stoxx index dropping by 1%.

In the note on the rate hike, the Governing Council explained that "

it is closely following the tensions underway on the markets

and is ready

to intervene where necessary to preserve price stability and financial stability in the euro area". 

According to Eurotower, "

the euro area banking sector is resilient

, with solid capital and liquidity positions".

In any case, the central bank makes it known that it has "all the tools necessary to provide liquidity to support the financial system of the

euro area, should there be a need, and to preserve the orderly transmission of monetary policy .

The ECB now expects a GDP of the Eurozone to grow by 1% in 2023 and by 1.6% next year against the +0.5% and +1.9% of last December's estimates.

He announced it to President Lagarde in the press conference on rates according to which "although the economy remains weak, we expect a recovery in the next few years".


According to the Foreign Minister and Deputy Prime Minister Antonio Tajani, in the crisis triggered by the war in Ukraine, the EU's reaction "has been light and dark: it has put a ceiling on the price of gas for beat inflation and from this point of view the EU has hit a beat but in my opinion

the EU of money, I am referring to the ECB, is not moving in the right direction

, even if today there was a start of rethinking It's not a good way to deal with inflation in our view."


According to the European Central Bank, "inflation should remain too high for too long a period of time. Therefore, the Governing Council decided today to raise the three rates by 50 basis points".

"The high level of uncertainty increases the importance of a data-driven approach to the Governing Council's decisions", which "will be determined by its assessments of the inflation outlook in the light of new economic and financial data, inflation dynamics and the intensity of monetary policy transmission", he continues.

According to new ECB estimates, "

inflation would average 5.3% in 2023, 2.9% in 2024 and 2.1% in 2025.

At the same time, underlying price pressures remain intense Inflation excluding energy and food continued to increase in February and ECB experts expect an average of 4.6% in 2023, a higher level than anticipated in the December projections".

Thereafter "it is expected to decline to 2.5% in 2024 and 2.2% in 2025, as upward pressures stemming from past supply shocks and the reopening of economic activity fade and tighter monetary policy will increasingly curb demand".

ANSA agency

Consumers, from the new ECB maxi-strike on household mortgages - Economy

The 50 basis point increase in interest rates decided today by the ECB represents an average blow of +35 euros per installment for Italian families who have taken out a variable rate mortgage (ANSA)

Meanwhile, the Swiss Federal Council

, the executive body of the government of the Swiss confederation, is holding an extraordinary meeting today on the situation in which Credit Suisse finds itself.

This was reported by the Swiss financial press agency Awp, specifying that it is not clear whether decisions will be taken today.

From the USA, according to advances in her written statements reported by the New York Times,

Treasury secretary Janet Yellen

reassured the Senate that "the US banking system remains solid and that Americans can feel confident that their deposits will be there when they need them ".

"This week's actions demonstrate our unwavering commitment to ensuring that depositors' savings remain safe," she said in relation to the crash of two US regional banks.



As for the ECB

, greater prudence was expected from Frankfurt, given the widespread and potentially persistent instability if the Credit Suisse case were to widen.

But the central institution has also seen itself tight on another front: inflation remains high, it has spread to the whole economy and we cannot risk loosening our grip right now by sending less decisive messages.

Why Credit Suisse is in trouble

ANSA agency

Credit Suisse thud, fear returns to the markets - Economy

Swiss central bank ready to offer liquidity if needed (ANSA)

Source: ansa

All life articles on 2023-03-16

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