In the middle of a market panic that has felled two US banks and pushed several others to the brink, the European Central Bank (ECB) has raised interest rates by another 0.5 percentage points. The ECB’s president, Christine Lagarde, had been warning this was necessary to bring eurozone inflation back to 2% by 2025. Unmoved by the fact that the banking crisis has been caused by higher rates, the ECB duly raised its main rate to 3% on March 16.
Lagarde acknowledged that several members of the ECB governing council were reluctant to support another hike, preferring to wait at least until the situation in the banking sector becomes clearer.
