Last week, the ECB looked the banking crisis in the face, and hiked by 50 basis points anyway. The action was perhaps not the odds on favorite. However, ECBs Lagarde said banks are in good shape, that the ECB has the tools to address banking/financial concerns, and the other tools to conduct monetary policy. With inflation still high, and rates still too low, they hiked by the 50 BPS promised at their last meeting.
Now ECB sources have the central bank taking a bow (or jinxing themselves?) by saying:
- Increasingly confident the EZ banking system has withstood the financial turmoil, allowing the ECB to resume rate hikes in due course.
The FOMC faces the same/similar issues today. It seems the banking system is stabilizing, and inflation remains high. Employment is also near record levels despite cuts from big tech. Will the Fed follow the ECB playbook and continue to tighten?
