ECB feared that dropping the half-point hike would send investors into a panic

The European Central Bank's interest rate decision on Thursday was influenced by concerns that an increase of any more than half a percent would send investors into a panic, according to people familiar with the talks.

‍

Trading looked for clues that other lenders would experience the similar pressures that have hit Silicon Valley Bank and Credit Suisse Group AG when policymakers gathered over the past two days. Luis de Guindos, vice president of the ECB, had earlier in the week cautioned European finance ministers that banks would be vulnerable to rising borrowing costs.

‍

There is also ongoing debate over the necessity for more hikes to bring inflation under control once the market turbulence has subsided, even if the ECB removed language regarding the future path for rates in its statement on Thursday, said the individuals who wished to remain anonymous because such discussions are private.

‍

According to the sources, a number of hawkish officials continue to believe that the terminal rate will be much higher than the present 3%. They cited President Christine Lagarde's statement that the ECB "would have more territory to cover" if its baseline economic prognosis were to be validated. Some, however, are speculating that the peak in borrowing costs may have passed sooner than originally believed.

‍

A representative of the ECB declined to respond.