Christine Lagarde, head of the European Central Bank, ECB, notes that there have been severe pressures on the financial market as banks have been in crisis. She says that the ECB is closely following developments.
But inflation risk outweighs the bank frenzy, she explains, and the ECB does not intend to abandon its mission to fight inflation.
"Inflation seems to be too high for too long.
Therefore, interest rates are now being raised by 50 basis points, or 0.5 percentage points.
The so-called refi rate will be raised to 3.5 percent from 3 percent. The announcement was in line with expectations, according to Bloomberg's tally.
But several heavyweight analysts believed the ECB would settle for a 25 basis point hike after the financial market turmoil in recent days. But according to Christine Lagarde, there was no doubt.
"We proposed 50 points, and a very large majority agreed with that proposal," she says.
ECB: Ready to act
She says three or four members did not want to support the decision, but not because they disagreed on the substance, but because they wanted to wait and see what the data showed and how the situation developed.
But Christine Lagarde explains that it is not possible to loosen her grip on the fight against inflation. It's better to resort to a "robust" measure with a 50-point rise, and then follow how the data develops, according to her.
The ECB writes in its press release that it "stands ready to act as necessary to preserve price stability and financial stability in the euro area. The euro area banking sector is resilient, with strong capital and liquidity positions".