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ECB Hikes Rates

Today the ECB raised rates by 0.5 to tackle the inflation problem in Europe.  This raise comes on the back of the Swiss National Bank (SNB) offering support to Credit Suisse with $54 Billion.   Credit Suisse shares rose after the announcement, thus restoring some confidence to the banking system.

It is interesting that the ECB raised by 0.5 instead of 0.25 given the current banking issues.  In short, the ECB by raising rates at 0.5 stated that the two issues are seperate.   SVB as mentioned in an earlier post failed in interest management and this sparked the current banking contagion risk.

At the moment, the FED has a 25% chance of no raise  or 75% chance of a 0.25 raise.   After the ECB move today, we project a raise of 0.25 to 0.5 with the possibily of 0.5 gaining ground.