Danni Hewson, head of financial analysis at AJ Bell, comments on the latest ECB interest rate decision:
“Markets had been pondering whether the current banking turmoil would prompt European central bankers to dial down their rate hike plans, but the ECB ploughed ahead with a 50 basis point rise, again citing its determination to return inflation to its two percent target.
“Its business-as-usual approach could be seen as vote of confidence in the European banking sector. If it had changed tack some investors might have taken it as a sign central bankers were seriously concerned about the current situation.
“That said, the ECB was at pains to make clear that it was acutely aware of current tensions and indicated it was ready and able to step in if things deteriorate further.
“It was pretty much a repeat of President Biden’s ‘whatever is needed’ pledge, in a bid to restore confidence after a series of shocks that have shaken nerves and raised the spectre of another global financial crash.
“Market mood had been improving ahead of the rates decision and in London there were a number of high street banking names firmly on the front foot including Lloyds and Barclays. But there is still a great deal of uncertainty and confidence is shaky at best.
“The big question on many minds is whether the Fed will follow the ECB’s playbook or if it will soften its approach to inflation, at least for the time being.”
