Fed between inflation and banking crisis

The eyes of the financial world are on the Fed and Chairman Jerome Powell and his address at the end of the new session of the US central bank due to the sudden banking crisis.

Powell and his team kick-started their monthly gathering on Tuesday with an unprecedentedly fuzzy conclusion. Most economists predict the central bank of the world’s biggest economy to increase interest rates by 0.25%. Yet, some urge that policymakers should pause to fortify economic security.

Derek Tang, an economist at LH Meyer/Monetary Policy Analytics in Washington, told Bloomberg that this tension could lead to existential dread.

Updating the growth rate

At this week’s conference, one of the most critical components is the issuance of new economic growth rate expectations by American monetary policymakers. With this crucial guidance, we can predict whether additional interest rate hikes will occur soon.

The forecasts and decisions will become public at 20:00 CET. Powell will speak at a press conference half an hour minutes later.

As of Tuesday afternoon, equity market participants in a poll expressed an 80 percent chance the Fed would raise rates by 0.25 percent, leaving key interest rates in a range of 4.75 percent to 5.0 percent, the most elevated after 2007. year, just before the world economic crisis.

After UBS took over Credit Suisse with Swiss state guarantees on Sunday, German central bank Governor Joachim Nagel said it was possible that banks would become “more cautious” in lending due to market uncertainty. However, he added that it is too early to conclude that the EU is heading for a credit crisis that would stifle demand.