off-the-wire

Euro, bonds nudge higher after ECB hikes rates by 50 bps

Kitco Media
By Reuters
Published:
Updated:
Reuters
LONDON, March 16 (Reuters) - The euro and bond yields edged up on Thursday after the European Central Bank raised rates by 50 basis points, even though some investors had thought the exceptional turmoil in financial markets might deter it from delivering another hefty rate hike. The ECB raised its benchmark interest rate by half a percentage point to 3.50%, as expected by a Reuters poll.


The euro's reaction to the decision was fairly muted, and was last trading flat on the day at $1.0582, down slightly from where it was before the decision.
The euro on Wednesday hit its lowest level against the U.S. dollar of $1.0516 since early January.


European bond yields were little changed on pre-decision levels. Germany's 2-year bond yield rose after the central bank decision, up 11.8 basis points at 2.503%. Yields move inversely to prices. An index of European banks fell to its lowest since January 2 in the minutes after the decision and was last down 0.8%.


The ECB has raised interest rates since July at its fastest pace on record to curb inflation. It had effectively promised another 50 bps increase for Thursday and signalled further moves in the months ahead.


But crowding out inflation were concerns of a fresh financial crisis, following the collapse last week of Silicon Valley Bank and a crisis at Credit Suisse, which pushed its shares to a record low on Wednesday.


Euro zone government bond yields and the single currency had already rebounded on Thursday after Credit Suisse said it would borrow up to $54 billion from the Swiss central bank to shore up liquidity and restore investor confidence.
(Reporting by Markets team; Writing by Joice Alves; Editing by Amanda Cooper)

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