The European Central Bank (ECB) had backed itself into a corner in advance of last week’s half percentage point interest rate hike. It famously raised interest rates in July 2008, only to reverse tack three months later after Lehman Brothers in the US collapsed and markets nosedived. Listen | 30:17 The collapse of Silicon Valley Bank (SVB) last week has spooked financial markets, with global banking stocks dropping significantly as a result. In her press conference after the rate-change decision, Lagarde was adamant there was no trade-off between the ECB’s inflation-taming rate hike and wider financial market stability. The wider tech/financial sector crunch from Meta’s job losses, SVB’s collapse and Credit Suisse’s overnight bailout appear strongly linked to higher interest rates and, in particular, the speed of monetary tightening.

Source: The Irish Times March 19, 2023 11:58 UTC