European Central Bank announces interest rate hike

Investors have seen two US banks collapse and shares of global investment firm Credit Suisse plunge to a record low. Now, they have learned the European Central Bank is raising interest rates by half a percentage point.

ECB President Christine Lagarde said in Frankfurt, Germany, on Thursday, "There is no trade-off between price stability and financial stability. And I think that if anything, with this decision, we are demonstrating this."

Lagarde and her colleagues have managed to coax inflation in the Eurozone down to 8.5 percent. However, their projections suggest prices will remain "too high for too long." They are determined to hit their inflation goal of 2 percent.

The policymakers have seen banking troubles in the US move closer to home. Executives at Credit Suisse have had to turn to the Swiss central bank, saying they would borrow up to 54 billion dollars.

Credit Suisse has become the first major bank to be thrown an emergency lifeline since the global financial crisis in 2008.

Lagarde served as France's finance minister at the time. She said policymakers responded by forcing banks to keep more cash and readily available assets on hand in times of trouble. She added that the industry is now "much, much stronger."