ECB raises interest rates by 0.5% as banks stocks wobble

The European Central Bank has increased base interest rates by 0.5% as planned, even amid the collapse of Silicon Valley Bank and considerable pressure on major European lender Credit Suisse.Policymakers at the European Central Bank (ECB) were set to meet on Thursday to set interest rates as the institution juggles both inflation and financial uncertainty.

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The meeting comes a week after the collapse of Silicon Valley Bank in the United States and amid difficulties faced by Credit Suisse in Europe.

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This had sparked fear of global financial turmoil and speculation that the ECB might alter or even abandon its planned rate increase. But the move went ahead as plannned soon after 2 p.m. local time (1300 GMT/UTC).

Euro rebounds off Credit Suisse lifeline

The euro and the Swiss franc regained some lost ground on Thursday off the back of news that Credit Suisse would borrow up to 50 billion Swiss francs (€50.7 billion, $54 billion) from the country's central bank.

The euro was up 0.4%, after losing 1.4% a day earlier — the biggest change in six months.

Some analysts saw it as a sign that the market's mood was improving somewhat, hours before the ECB interest rate announcement.

"Now, Credit Suisse has the clout of (the) Swiss National Bank covering its back, which is a central bank that doesn't mess around in the time of crisis," Matt Simpson, senior market analyst at forex trading platform City Index, told the Reuters news agency.

"So ultimately, I think this is a good thing for market sentiment."

zc/rc (Reuters, AFP)

(The above story first appeared on LatestLY on Mar 16, 2023 07:00 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).