In the sharp declines recorded by European banks, the aggressive tone of the European Central Bank (ECB) continued with interest rate hikes ahead of next Thursday’s meeting, which a priori followed a new increase of 50 basis points.
The Federal Reserve of the United States (Fed) announced yesterday, Monday, that it will withdraw its management and oversight of the Silicon Valley Bank after its debacle, and will publish a report with its conclusions afterwards May 1.
“We must be humble and one careful analysis and thorough discussion of how we monitored and regulated this bank, and what we should learn from this experience,” Michael Barr, the Fed’s vice president for supervision, said in a statement.
Barr will be responsible for leading the research after the fiasco of the SVB, which had to be intervened last week by the Californian authorities and whose fall has created tensions in the Bank system.
“Events related to Silicon Valley Bank require careful analysis. thorough, transparent and fast by the Federal Reserve,” Fed President Jerome Powell added to the letter.
The European Central Bank meets on Thursday
The sharp declines registered by European banks would also weigh on the aggressive tone of the European Central Bank (ECB) with the rises in the interest rates look forward to meeting this Thursday of the institution, where a new increase of 50 basis points was expected a priori.
There is a feeling in the market that something could break here too, which is why European banks are being severely penalized, says Sergio Ávila, IG Market Analyst, for whom it could be more than a contagion problem that with the continuation of the aggressive policy of central banks, more banks could end up in a similar situation, including in Europe.
In this sense, the XTB analyst, Darío García, also says that the market is starting to discount an increase of 25 basis points for the next meeting, although in the case of the ECB, he believes that the decision would have already been made and the increase will be maintained at 50 basis points for this Thursday, though do not rule out a change of position of the entity headed by Christine Lagarde.
In fact, according to updated forecasts from Goldman Sachs, the US Federal Reserve (Fed) will not raise interest rates at the meeting to be held next week.
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Source: EITB
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
