FRANKFURT, March 16 (Reuters) - European Central Bank
policymakers only agreed on another major increase in interest
rates on Thursday after Credit Suisse secured a lifeline from
the Swiss central bank and financial markets stabilised, three
sources told Reuters.
The sources close to the Governing Council said a sudden
rout in the shares of Credit Suisse and euro zone banks on
Wednesday had thrown their well defined plan for another
50-basis-point increase into turmoil as investors feared a new
financial crisis.
Some called for leaving rates unchanged and to wait for
financial markets to settle down, rather than raise borrowing
costs for a sixth time and risk making matters worse, the
sources added.
But the Swiss National Bank's decision to bankroll Credit
Suisse with a 50-billion-franc loan overnight helped steady
financial markets and marked a turning point for going ahead
with the planned rate increase, the sources said.
An ECB spokesman declined to comment
Investors had been doubting the ECB's resolve in going
through with the hike worth half a percentage point which it had
effectively pre-announced in February, with some analysts
wagering on a smaller move worth 25 basis points.
But the sources said this was never discussed, with the
discussion focussing on a 50-basis-point move or none at all.
(Reporting By Francesco Canepa and Balazs Koranyi; Editing by
Toby Chopra)
Messaging: francesco.canepa.thomsonreuters.com@reuters.net))
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