The European Central Bank pushed through another big increase in interest rates on Thursday, sticking to its inflation fight despite turmoil in financial markets that has raised fears about a global banking crisis, Report informs via Reuters.
The ECB raised its three policy rates by 50 basis points in its sixth consecutive rate hike and said future moves will depend on incoming data.
“The elevated level of uncertainty reinforces the importance of a data-dependent approach to the Governing Council’s policy rate decisions, which will be determined by its assessment of the inflation outlook,” the ECB said.
Thursday’s decision increases the rate the ECB pays on bank deposits, which is the benchmark for borrowing costs in the euro zone, to 3.0% from 2.5%.
The central bank for the 20 countries that share the euro has been locked in a fight to bring inflation in the currency bloc back to its 2% target, from 8.5% last month.
But investors had begun to doubt the ECB’s resolve to raise rates again this week as a selloff in the banking sector grew to enmesh Switzerland’s Credit Suisse, a large lender on the euro zone’s doorstep.
“The Governing Council is monitoring current market tensions closely and stands ready to respond as necessary to preserve price stability and financial stability,” the ECB said.
It added recent “tensions imply additional uncertainty around the baseline assessments of inflation and growth”.
Some calm returned to financial markets on Thursday after the Swiss central bank threw Credit Suisse a $54 billion lifeline overnight.