The European Central Bank (ECB), as announced at the previous meeting in February, announced a new increase of 50 bp. on key interest rates on Thursday, despite recent tensions in financial markets, signaling its determination to ensure a timely return of inflation to its medium-term target of 2.0%. This decision, according to his official statement, was based on the assessment that inflation is expected to remain high for a long time, at the same time, the banking sector in the euro area is considered to be resilient, with strong capital and liquidity positions. , and in any case, the bank’s “toolkit” is fully equipped to provide liquidity to the financial system if needed. With regard to guidance on the future direction of its monetary policy (forward guide), in view of the increased uncertainty in the markets, the ECB has fully adopted the approach that decisions on the rate of interest rates will be determined by an assessment of the economic and financial data approach, contrary to what it expressed at recent meetings the intention to significantly increase interest rates.

Despite the new increase of 50 m.w. on interest rates, the relatively dovish tone of the ECB’s statement and President Christine Lagarde’s press conference, which reinforced the view that the current cycle of interest rate hikes by major central banks may be nearing completion, contributed to the relative stabilization of international markets on Friday, after , as large losses have been recorded in recent days due to events related to Credit Suisse and the collapse of Silicon Valley Bank (SVB) and Signature Bank in the US. The news that 11 major US banks, as a token of their “trust” in the US banking system, agreed to provide a total of $30 billion in deposits with First Republic Bank played a major role in a relatively modest improvement in investment appetite. risk., which was rumored to be the next bank to fail. Fixed income markets, after sharp swings in recent days, strengthened significantly on a weekly basis, while the euro also rose in the currency markets at the end of the week thanks to new ECB rate hikes.

* Department of financial analysis and research of international capital markets of Eurobank.