Exclusive insight for TMI subscribers! Northern Trust Asset Management share a monthly market commentary for treasurers.
Eurozone Market Update
Despite the recent market turbulence caused by Silicon Valley Bank (SVB) and Credit Suisse (CS), the ECB stuck to its forward guidance by raising all interest rates by 50 bps, taking the deposit rate up to 3%. While driven by elevated inflation, the decision was not unanimous, with three to four members advocating for a wait-and-see approach. There was a doveish change of tone on forward guidance, with the governing council stating: “The elevated level of uncertainty reinforces the importance of a data-dependent approach to policy rate decisions”. The ECB also underlined that rate rises are focused on combatting inflation and that many other tools exist in its extensive liquidity facilities to tackle any market fallout from the recent banking turmoil.