Credit Suisse said in the early hours of Thursday that it would borrow as much as 50 billion francs ($54 billion). The Swiss National Bank has come to the rescue, offering liquidity through a covered-loan facility. Former Federal Reserve Vice Chair Alan Blinder is similarly minded, telling Bloomberg TV that he’d leave borrowing costs untouched this month due to the potential consequences for Europe were Credit Suisse to fail. In the quiet period that silences ECB policymakers before rate meetings, ex-officials Vitor Constancio and Lorenzo Bini Smaghi have weighed in to advise a quarter-point increase at most. But with the Federal Reserve’s next rate meeting still a week away, the ECB will give the first indication of what the banking blowup means for monetary policy. While worries over inflation haven’t gone away, the challenge is to battle elevated price gains with financial stability already in the balance. Investors are pricing 40 basis points, while Bloomberg Economics and Deutsche Bank predict just 25. The crisis at Credit Suisse Group AG that followed the collapse of Silicon Valley Bank has left analysts less certain that the intended hike will in fact materialize. The European Central Bank’s plan to raise interest rates by another half-point on Thursday has been thrown into question by banking turmoil that began in the US but has since landed with a jolt much closer to home.
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