STORY: The European Central Bank is pressing ahead with rate hikes, despite the turmoil on global stock markets.

On Thursday (March 16) it raised its benchmark rate by another half a percentage point to 3%.

Only a few days ago that had been seen as all but certain.

But doubts had crept in after the rout in global bank stocks, sparked by the collapse of Silicon Valley Bank and worries over the survival of Credit Suisse.

ECB chief Christine Lagarde said stubbornly high inflation meant the bank had to press on with hikes.

But she said policymakers were ready to respond if the situation changed:

“We are monitoring current market tensions closely, and stand ready to respond as necessary to preserve price stability and financial stability in the euro area”.

Rising interest rates have been seen as a major factor in the recent troubles for some banks.

Among other reasons, they tend to lower the value of bonds, which form a vast chunk of the balance sheet for many lenders.

So it was no surprise to see a mixed market reaction.

Euro zone bank shares hit two-month lows after the news, but later rallied.

Credit Suisse shares also seesawed, but remained up around 17% following the morning’s news that it had secured a $54 billion lifeline from the Swiss central bank.

Now attention turns to whether the Federal Reserve will also press ahead with hikes when it meets next week.

After the ECB move on Thursday, markets were pricing in another quarter-point increase.