The past week has been turbulent, to say the least, in the world's financial markets, with niche banks in crisis and large fluctuations in the stock markets.

The Stockholm stock exchange had its worst day in over a year on Wednesday, with the broad index plummeting 3.8 percent after Swiss major bank Credit Suisse's stock plunged.

"Has undeniably been messy"

On Thursday, the European Central Bank raised its key interest rates – despite bank turmoil. At that time, the Stockholm stock exchange was in the red, but the interest rate hike was expected by many and by the end of the trading day, the Stockholm Stock Exchange's broad index had risen by 1.4 percent.

However, the decline continued for several banks. SEB, Swedbank and Handelsbanken fell 1.3–2.0 percent.

"It has undeniably been messy since last week and we do not yet know if Credit Suisse and the bank crashes in the US are about isolated events, but there do not seem to be such great spread risks," says stock market psychologist Lars-Erik Boström, who teaches behavioral economics and manages the Åhlén Foundation's money.

The leading stock markets in Europe also took a leap upwards on Thursday. The London Stock Exchange's FTSE index rose 0.9 percent, the Paris Stock Exchange's CAC40 index rose 2.0 percent and the Frankfurt Stock Exchange's Dax index rose. Credit Suisse made up for parts of Wednesday's big fall, going closer to 20 percent plus.

"Will be more cautious"

Many are now wondering how the US Federal Reserve will act going forward when it comes to the policy rate. Following the recent bank turmoil, pressure has increased on the Fed and other central banks to take into account not only inflation but also other factors when making interest rate decisions.

"I think central banks will be more cautious about interest rate hikes in the future. The Fed is likely to make another hike in its key interest rate, probably at 25 basis points, before taking a break and rate hikes ebb. In that case, it could be a stabilizing factor for the stock markets," says Lars-Erik Boström.

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Are we heading for a new financial crisis? SVT's economic commentator Alexander Norén goes through how you can be affected by the bank turmoil and why a new report raises a warning finger to the Swedish banks. Photo: SVT/Marco Nilsson/TT/AP