Salem Radio Network News Tuesday, March 28, 2023


ECB policymakers agreed on big hike only after Credit Suisse rescue – sources

FRANKFURT (Reuters) – European Central Bank policymakers only agreed on another major increase in interest rates on Thursday after Credit Suisse secured a lifeline from the Swiss central bank and financial markets stabilised, three sources told Reuters.

The sources close to the Governing Council said a sudden rout in the shares of Credit Suisse and euro zone banks on Wednesday had thrown their well defined plan for another 50-basis-point increase into turmoil as investors feared a new financial crisis.

Some called for leaving rates unchanged and to wait for financial markets to settle down, rather than raise borrowing costs for a sixth time and risk making matters worse, the sources added.

But the Swiss National Bank’s decision to bankroll Credit Suisse with a 50-billion-franc loan overnight helped steady financial markets and marked a turning point for going ahead with the planned rate increase, the sources said.

An ECB spokesman declined to comment

Investors had been doubting the ECB’s resolve in going through with the hike worth half a percentage point which it had effectively pre-announced in February, with some analysts wagering on a smaller move worth 25 basis points.

But the sources said this was never discussed, with the discussion focussing on a 50-basis-point move or none at all.

(Reporting By Francesco Canepa and Balazs Koranyi; Editing by Toby Chopra)


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