The ECB Is Set To Raise Interest Rates. Unlike The Fed, It Won't Be Influenced By The Banking Crisis.

A half-point increase in the interest rate is scheduled by the European Central Bank for Thursday. There has been no doubt that the move will go ahead after it was promised last month, despite the sudden collapse of a string of U.S. banks.

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As a result of statements by Christine Lagarde, who has expressed a desire to make the benchmark refinancing rate higher from 3% to 3.5%, it is expected that the rate will be raised to 3.5% from the current 3.5%. It should also be noted that at the last ECB decision on February 8th, half a point was raised as well.

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Contrary to the U.S. Federal Reserve, the European Central Bank has not yet slowed its aggressive campaign of raising borrowing costs. As a consequence of the collapses of Silicon Valley Bank and other institutions, the Federal Reserve has begun to raise interest rates by a quarter-point, which contrasts with the ECB's plans for the next quarter-point increase in rates. 

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Nonetheless, there is a good chance that Lagarde will be asked about the US banking woes and the ructions in the stock market over the course of the past week when she holds a press conference on Thursday afternoon. A very large part of the ECB's current balance sheet is dedicated to a program that aims to reduce the inflation rate that is still far too high.

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As a result, ING strategists who are led by Antoine Bouvet said that, so far, there has not been much contagion to European markets. In summary, the ECB will not be able to afford a distraction at this time as it is in the middle of a determined campaign to fight inflation.