Vitor Constancio is no longer at the ECB but he was recently his comments likely offerssome insight into how central bankers think about the current situation.
"Central Banks should not ignore the signs from the markets and the more likely recession forthcoming. They should tone down their hiking campaign. The ECB should do at most 25 bps and not the announced 50 pbs. The Fed should also do only 25bps next [week]," he writes.
Constancio was Vice President of the European Central Bank from 2010 to 2018 and was responsible for overseeing its financial stability efforts. He currently serves on the European Systemic Risk Board and the European Fiscal Board.
Credit Suisse has reportedly asked the SNB and Swiss banking regulator FINMA for a public show of support but hasn't received it yet. Shares are off the worst levels of the day but fell 23%.
The ECB has long promised to do 50 bps at tomorrow's meeting but the market is now pricing in an 81% chance they only go by 25. Beyond that, how the communicate about future policy will be a major determining factor in how markets respond tomorrow.
