(Updates with details, ECB decision; changes to wording, authors and origin, before LONDON)

By Herbert Lash and Alun John

NEW YORK/LONDON, March 16 (Reuters) – The dollar fell and the euro rose on Thursday after the European Central Bank raised interest rates as expected despite market chaos in recent days, a sign that the Reserve Fed will follow next week as both remain on track to bring inflation under control.

* The dollar and euro were kept in a tight range before the ECB announced a half-percentage-point rate hike as promised to curb inflation, and markets gauged the likelihood of a a yield of over 80% for the Fed to raise rates a quarter point on March 22.

* “They have managed to find a balance that seems appropriate, trying to take action in the fight against inflation, while recognizing that the world has changed since they last met,” said Simona Mocuta, chief economist at State Street Global Advisors in Boston.

* The ECB raised rates at the fastest pace in history and the Fed at its fastest pace in four decades to rein in high inflation.

* But the collapse of global markets following the collapse of Silicon Valley Bank in the United States last week and the fall in value of Credit Suisse shares this week threaten to upend those plans.

* The euro fell 0.25% after the ECB’s decision, but then reversed its trend. The euro rose 0.41% to $1.0618, while the dollar index fell 0.296%.

* Foreign exchange and other markets calmed down on Thursday after Credit Suisse said it would borrow up to $54 billion from the Swiss National Bank to boost liquidity and investor confidence. The bank’s shares had plunged as much as 30% on Wednesday.

* That stability also helped the Swiss franc strengthen, and the dollar fell more than 1% against the currency to 0.9232, reversing some of its 2.15% gain on Wednesday, the biggest gain daily since 2015.

* The Japanese yen appreciated 0.27% to 133.04 units to the dollar, while the pound traded at 1.211 dollars, an increase of 0.37%.

(Edited in Spanish by Javier Leira)

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