What will the ECB do amid rising inflation and bank stress? | MarketTalk: What’s up today? | Swissquote

Show notes

Banks were on the chopping block, again, on Wednesday, after Saudi National Bank’s Chairman Mr. Al Khudairy told Bloomberg TV that they wouldn’t inject more money to Credit Suisse (CS) as they already hold 9.9% of the bank and going above 10% would mean further regulatory and statutory requirements.
Credit Suisse stock sold off to a fresh record. The selloff in CS shares spread to other bank shares as well, and the bank stocks pulled the market down with them.
Since then, the Swiss National Bank (SNB) said it would provide 50 bn franc liquidity to Credit Suisse and FINMA confirmed that CS meets the higher capital and liquidity requirements applicable to systemically important banks.
With yesterday’s fresh stress on bank stocks, a 50bp hike from the European Central Bank (ECB) at today’s monetary policy meeting is less than certain.
The ECB has the difficult task to be the first major central bank to decide what to do amid the banking crisis. Its decision could change the expectations for other central banks.
For now, the base case scenario for next week’s Bank of England (BoE) meeting is no hike.
While activity on Federal Reserve (Fed) funds futures still point at a 25bp hike next week, with around 65% chance, as of this morning.
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