Investors and analysts call for more coordinated action from outside central banks restore financial stability as it is feared that unrest in global banking sector will continue under increase in interest rates. After the collapse of two American financial institutions and the Swiss government-sponsored takeover Credit Suisse Markets remained on high alert over the weekend. On Friday, the price of his shares Deutsche Bank retreated amid fears that regulators and central banks have not yet been able to contain the worst blow to the banking sector since the 2008 global financial crisis.

Leading central banks, including the Fed, have recently taken steps to boost liquidity through ongoing US dollar swaps. At the same time, however, both the ECB and the Fed have continued to raise interest rates over the past two weeks as they continue to grapple with high prices. Eric Nielsen, an analyst at UniCredit in London, points out that central banks should not separate monetary policy from financial stability at a time of heightened fears that banking problems could lead to a wider financial crisis. “Major central banks, including the Fed and the ECB, should make a joint statement that further interest rate hikes are out of the question, at least until financial market stability is restored.” , he said on Sunday. “Such statements in the coming days will likely be needed to pull us back from the brink of a much deeper crisis,” he stressed.

Ensuring financial stability by continuing monetary policy to reduce inflation.

US markets also expect the Fed to complete its rate hike cycle. On Friday, Fed fund futures traders predicted that there was only a 20% chance that the US Federal Reserve would raise rates by another 25 basis points at its May meeting. They also give an 80% chance of keeping interest rates unchanged between 4.75% and 5.0%. However, others believe that regulators will be able to ensure financial stability by continuing their campaign to fight inflation. “We see central banks adhering to the ‘unbundling principle’, using balance sheets and other instruments to ensure financial stability while maintaining a monetary policy focus on lowering inflation,” BlackRock said last week.