Balancing act: Why central banks are cautious after bank crisis

Recent bank failures revived fears of a full-fledged financial crisis and global recession – although economists have cautioned that the situation is not likely to lead to a repeat of the 2007-08 crisis.

The sudden collapses of Silicon Valley Bank and Signature Bank in the United States and Credit Suisse in Europe were blamed, in part, on rapidly rising interest rates.

The banking sector’s woes highlight the delicate balance facing central banks as they seek to tame high inflation without putting unnecessary stress on financial institutions.

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