Four well-informed sources told Reuters that the approval of European Central Bank officials, today, Thursday, to another large increase in interest rates came after the “Credit Suisse” bank secured a rescue package and calmed the markets.
The sources added that policy makers nervously leaned on their phones and received regular market updates from the ECB staff on the first day of their meeting on Wednesday, as concerns about “Credit Suisse” caused bank shares to fall in the euro area and fueled fears of a new financial crisis.
The sources said that the sudden drop caused disruption to the European Central Bank’s plan to raise interest rates by another 50 basis points and put question marks about the outlook for the economy and inflation.
But the sources added that the Swiss central bank’s decision to provide 50 billion Swiss francs ($54 billion) to Credit Suisse overnight helped stabilize financial markets and gave most policymakers confidence to go ahead with rate hikes as planned.
