ECB Warns Rate Hikes Are Putting Market Stability at Risk
- Markets are vulnerable to disorderly adjustments, ECB finds
- Higher rates, lower asset quality may damp bank profitability
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The European Central Bank said that financial markets will be vulnerable to negative shocks as it continues the fight against inflation, with real estate among the sectors at risk.
Higher interest rates are testing the resilience of households, companies, governments and property markets, the institution said Wednesday in its biannual Financial Stability Review. That’s leaves investors potentially exposed to disorderly adjustments, it cautioned.