MNI BRIEF: Banking Turmoil Could Further Tighten Conditions
Bank of Spain Governor says financial conditions could tighten again across euro area in wake of banking tensions.
Recent tensions in financial markets following the collapse of Silicon Valley Bank and the Credit Suisse takeover could generate additional tightening of financial conditions across the Eurozone, putting downward pressure on economic activity and inflation, Bank of Spain Governor Pablo Hernandez de Cos said Monday.
These factors should be taken into account when the European Central Bank next meeting, underlying that future movements will depend on new data, core inflation and “the intensity of monetary policy transmission,” a factor that is sensitive to tensions in financial markets, Hernandez de Cos said in a speech in Valladolid.
De Cos stressed that financial stability is a “prerequisite” for price stability and recommended to European lenders to carry out a provision and capital planning policy, to allow them to allocate increases in profits to further boost resilience.