ECB hikes by 50bps after market close call

ECB hikes by 50bps after market close call
The ECB has today hiked rates by 50bps to 3.50% in a decision that was not widely expected following the recent fallout from Credit Suisse, see ECB knife-edge; Traders ask will they or won't they?

“Inflation is projected to remain too high for too long,” states the Governing Council in the opening line of today’s statement.

Ahead, it stresses data dependency for future decisions: “The elevated level of uncertainty reinforces the importance of a data-dependent approach to the Governing Council’s policy rate decisions.”

As for addressing current market woes, the ECB says it is watching developments and highlights existing liquidity provisions already in place: “The Governing Council is monitoring current market tensions closely and stands ready to respond as necessary to preserve price stability and financial stability in the euro area. The euro area banking sector is resilient, with strong capital and liquidity positions. In any case, the ECB’s policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy."

In the market, an already volatile session saw further swings in price action. White Euribor futures have rallied up to 12bps while reds have gained up to 16bps. The Bund future has rallied (paring earlier losses following news of SNB support for Credit Suisse) and was last trading -25 ticks on the day while the 10y yield was marked around 2.15% (+1.5bps).   

ECB President Lagarde is due to begin speaking at the press conference at 14:45 CET.