After the earlier headline here, it was almost certain that the ECB would stick to a 50 bps move and markets were more or less convinced of it. Now, it may not look like it as the jitters have returned amid rising risks in the banking system involving Credit Suisse. But can the ECB still push through with rate hikes even if faced with liquidity risks? Well, they might have a few potential solutions.
They could take a leaf out of the Fed's playbook actually and provide a backstop as well as ease the rules on collateral. But more specifically to the euro area, off the top of my head is that they could just adjust the early repayments on TLTROs and let them roll over for longer instead.
