The ECB raises interest rates by half a point but warns that it is “prepared” to inject liquidity into banks if necessary

The European Central Bank (ECB) has decided to go ahead with its roadmap despite the panic unleashed this week in the financial markets due to the Credit Suisse crises. The institution chaired by Christine Lagarde has approved this Wednesday another rise in interest rates – the sixth in a row – by half a point, already placing them at 3.5%, as she has reported in a statement. The monetary authority had already warned of this movement, but in the last few hours the possibility of a more moderate increase of 0.25 points had won integers among investors and analysts. Instead of lowering rates, the entity has decided to promise the “liquidity” that is necessary to respond to a possible financial crisis. The head of the Eurobank appears before the media from 2:45 p.m. to give an account of the agreements adopted in the Governing Council.

The ECB believes that inflation in the medium term is moderating, and in fact is already projecting that the rise in prices in 2025 will be 2.1%, just one tenth above the institution’s objective. Frankfurt believes that it remains “too high for too long”. Now, the financial tremor that has shaken Europe has reached Frankfurt. According to Bloomberg, the ECB warned the finance ministers of the euro zone last Tuesday that some of its banks could be vulnerable to these turbulences. Faced with this situation, the Governing Council adopts two measures: one, not reveal the next steps in order to stop having its hands tied, and two, warn that it is ready to act.

“The Governing Council is closely monitoring the current tensions in the markets and stands ready to respond as necessary in order to maintain price stability and financial stability in the euro area,” reads the statement, in which It adds: “The ECB has all the necessary monetary policy instruments to provide liquidity support to the euro area financial system if necessary and preserve the smooth transmission of monetary policy.”

Finally, the risk map that the ECB directors face is increasingly vast and complex. The institution is determined to take the path that it believes will take it faster towards the end of inflation, still at 8.5% in the euro zone. But until he manages to tame prices, he must deal with other dangers: panic in the markets due to the crisis of an entity located in none other than Switzerland, traditionally a great global financial stronghold on the doorstep of the euro zone. This new front threatens to injure an economy, the European one, which has exhibited great resistance, but on which too many blows are already weighing.

The turmoil stirred up the ghosts of 2011, when the then head of Eurobank Jean-Claude Trichet decided to raise interest rates at the wrong time. Therefore, economists and investment banks began to think about a more moderate response from the ECB. However, turning back meant that the markets could backtrack, admitting that fear in the markets was more than justified and giving a new setback to the valuation of European banks. Analysts also believed that toning down the response could damage the credibility of the Eurobank, which had already been hit by communication problems at Lagarde’s latest press conference.

The decision has also contributed to the firewall that may have involved the aid of up to 50,000 million euros that the Swiss National Bank can give to the bank. The ECB also does not lose sight of the exchange rate with the dollar, which in recent days had appreciated again as a result of fear in Europe. “Unlike previous episodes of banking crises, the macroeconomic context is more resilient, with persistent inflationary pressures, making it difficult to choose between fighting inflation and financial stability risks. Lagarde may adopt an aggressive but evasive tone this Thursday ”, predicted the director of Macroeconomic Analysis at Pictet, Frederik Ducrozet.

[Noticia de última hora. Habrá ampliación]

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