MNI BRIEF: ECB Hikes 50Bps, But Says Uncertainty Now Elevated

The European Central Bank pressed ahead with an expected 50bp deposit rate hike Thursday, but did not offer any form of guidance as to future policy and instead reasserted the importance of adopting a data-dependent, meeting-by-meeting approach, with the Governing Council monitoring current market tensions closely in the wake of the SVB collapse and recent event with Credit Suisse. (see MNI ECB WATCH: Turmoil Raises Doubts Over 50Bps Guidance).

Europe's banking system is resilient, but the ECB "stands ready" and is "fully equipped to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy," it said.

ECB staff projections show inflation averaging 5.3% in 2023, 2.9% in 2024 and 2.1% in 2025. Core inflation expected to average 4.6% in 2023, 2.5% in 2024 and 2.2% in 2025