ECB sticks to keep increasing its interest rates

The European Central Bank (ECB) is expected to continue increasing interest rates, as the 2008 financial crisis is not likely to be repeated with European banks facing tougher rules than U.S. banks, said Belgian central bank chief, Pierre Wunsch.

The ECB has increased interest rates by 50 basis points on Thursday, with expectations of more increases in the future, as inflation is predicted to remain over two percent until 2025. The bank also increased its deposit rate by 350 basis points, three percent since July.

“Firstly, inflation has remained too high, for too long. Secondly, we don’t see a structural problem with European banks, although it needed to be seen what impact the events in U.S. banks and Credit Suisse would have in coming days,” said Wunsch.

“We don’t have any information indicating the European banks to be vulnerable, if you look at the Belgian banks, they are more solid than the average of European banks. That’s why it is very hard to imagine a repeat of the financial crisis,” added Wunsch.

Global banking stocks have been impacted by Silicon Valley Bank’s collapse, and Credit Suisse being forced to tap $54 billion in central bank funding, which shows current weaknesses in the banking sector.