The Euro Stoxx Banks index (SX7E) closed at 168.40 on Thursday — its highest level since June 2008 — after the European Central Bank held the deposit facility rate steady at 2.50% and President Christine Lagarde delivered a notably hawkish post-meeting press conference. The Governing Council statement removed the "ready to adjust if needed" phrase that had been interpreted as dovish optionality, replacing it with "policy is now in restrictive territory and will remain so as long as necessary."
Lagarde said in response to a Reuters question that "the bar for further easing this year is meaningfully higher than markets had assumed coming in" and emphasized that core services inflation "has remained sticky at 3.4% for three months." Overnight-index swap markets cut June ECB cut probability to 18% from 41% pre-meeting, with September probability falling to 56% from 78%.
Specific Bank Reactions
Deutsche Bank AG (DB / DBK.DE) rose 4.6% to €18.40, BNP Paribas (BNP.PA) added 3.8%, Banco Santander (SAN) gained 3.4%, ING Groep (INGA.AS) jumped 3.6%, UniCredit (UCG.MI) added 3.2%, Crédit Agricole (ACA.PA) rose 2.8%, Société Générale (GLE.PA) gained 4.1%, Intesa Sanpaolo (ISP.MI) added 2.6%, Lloyds Banking Group (LYG / LLOY.L) climbed 3.9%, NatWest Group (NWG