Maintaining confidence in the banking system is essential. Economists at ANZ Bank think central banks have acted appropriately, but it is taking time for markets to settle. The very early evidence is that real economic activity has proved resilient.

Caution warranted, but very early data resilient

“The very early evidence shows the real economy in the US and EA has held up well during recent banking volatility. That may reflect the quick and comprehensive response by policymakers, aimed at underwriting bank liquidity and assuring depositors’ money is safe. However, it will take time before a comprehensive assessment can be made.”

“A healthy banking system is central to economic stability. If interventions are successful in allaying a widespread and disinflationary tightening in credit conditions, central bank tightening will have further to run.”