Closing post
Time to recap.
The European Central Bank has pressed on with its plan to hike borrowing costs, despite the turmoil in the financial system.
The ECB lifted its benchmake rates by half a percent, or 50 basis points, “in line with its determination” to bring inflation down to its 2% target.
The decision surprised some investors, who thought the crisis gripping Credit Suise could have encouraged the ECB to rethink its plans. Three or four policymakers did fail to back the plan, though.
ECB president Christine Lagarde told reporters in Frankfurt that Europe’s banks were much stronger than in the financial crisis 15 years ago, saying:
“I was around in 2008, so I have clear recollection of what happened and what we had to do, we did reform the framework, we did agree on Basel III. We did increase the capital ratio, we did increase the financial coverage ratio as well.
And I think that the banking sector is currently in a much, much stronger position than where it was back in 2008.”
Lagarde also cautioned that “The outlook for economic growth is tilted to the downside”, and that the market tensions could led to tighter credit conditions and hurt confidence.
Shares in Credit Suisse have rebounded today, after it revealed plans to borrow up to 50bn Swiss francs (£44bn) from the Swiss central bank to boost liquidity and calm investors.
Credit Suisse shares are up 19% in late trading, meaning it has recovered much – but not all – of Wednesday’s 24% tumble.
In the US, the biggest banks are reportedly discussing a joint rescue of regional lender First Republic. Its shares are down almost 20% in late trading.
European markets are staging a moderate rebound after heavy losses yesterday. The FTSE 100 is up 72 points, or 1%, at 7415 points, having tumbled 3.8% yesterday.
In other news:
America’s labour market was stronger than expected, as employers continued to hold onto workers.
There were 192,000 new ‘initial claims’ for unemployment support last week, down from 212,00 the previous week, and lower than the 205,000 claims forecast.
Weekly Initial Unemployment Claims decrease to 192,000 https://t.co/6OKYChPG8E pic.twitter.com/trOpTruuDf
— Adrian V. “Avi” Barbour (@avbarbour86) March 16, 2023
