ECB raises rates 50bps despite warning EU banks could be vulnerable to hikes

Caution against complacency

The European Central Bank has raised its interest rates by 50 basis points, despite warning that European Union banks could be vulnerable to further rate hikes.

The statement released by the governing council declared that "inflation is projected to remain too high for too long", and as such, the 50bps rise aimed to "ensure the timely return of inflation to  the 2% medium-term target". The ECB also noted the projections were finalised in early March, "before the recent emergence of financial market tensions", likely alluding to the collapse of Silicon Valley Bank and recent turmoil at Credit Suisse. "As such, these tensions imply additional uncertainty around the baseline assessments of inflation and growth," the governing council said. Pr...