ECB between 'rock and hard place' to get it right on rate hikes as bank crisis deepens

The banking contagion which has spread from the US to Europe was caused by the huge increases in official interest rates

Christine Lagarde, president of the European Central Bank: Any comments on the bank crisis on Thursday will be followed closely.

The European Central Bank is caught "between a rock and a hard place" as it prepares to reveal at lunchtime on Thursday whether to sanction a hefty half-point increase in interest rates that will pile on the financial pain for households and businesses, experts say. 

The dilemma comes because the central bank had signalled that a further hefty rate increase was on the cards as it fights stubbornly high levels of inflation across Europe. But that was before the world banking markets were rocked last weekend by the collapse of Silicon Valley Bank and other banks in the US.