London: The European Central Bank carried through with a large interest rate increase Thursday, brushing aside predictions it might dial back as US bank collapses and troubles at Credit Suisse feed fears about the impact of higher rates on the global banking system. The ECB hiked rates by half a percentage point, underlining its determination to fight high inflation of 8.5%. While some foresaw a smaller increase because of the banking turmoil, President Christine Lagarde repeatedly called the banking sector in the 20 countries using the euro currency “resilient,” with strong financial reserves and plenty of ready cash. And if it became necessary, she said, the ECB is “fully equipped” to provide additional support to the system. “We are monitoring current market tensions closely and stand ready to respond as necessary to preserve price stability and financial stability,” Lagarde said.
ECB Vice President Luis de Guindos said the eurozone’s exposure to Credit Suisse, which is outside the European Union’s banking supervision structure, was “quite limited” and “not concentrated” in any one place.
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