This Wednesday, the US Federal Reserve will decide on key interest rates for the first time since the collapse of the Silicon Valley Bank and two other banks in the USA.
The Fed’s decision is more open than it has been for a long time. The central bank must balance the fight against persistently high inflation against the risks for the banking sector.
We’ve compiled the expectations of key analysts and market watchers in the US. All in all, they are the most likely to speak for another interest rate hike of 0.25 percentage points.
Determined fight against inflation or easing of the banking crisis in the US? Rate hike, right? And if so, at what speed? These are the questions the US Federal Reserve will be addressing this Wednesday. It is their first monetary policy meeting since the collapse of the Silicon Valley Bank (SVB) and two other banks in the US – also as a result of previous interest rate hikes. For a long time, a decision by the Federal Reserve (Fed) was not considered as open as it was this week.
Opinions on the markets as to how the key interest rates in the USA will continue have been going back and forth several times recently. Earlier in the month, Fed President Jerome Powell hinted that the Fed could pick up the pace of rate hikes again. The ninth rate hike in a row was considered safe. The only question seemed to be whether the Fed would increase the interest rate spread by 0.25 percentage points as in February or by 0.50 percentage points as before. Powell pointed out that inflation remains well above the 2% target at 6%.
But then the Silicon Valley Bank collapsed and two other banks had to be closed. And expectations on the markets swung in the direction of an interest rate pause. There was even talk of a small interest rate cut. Finally, last week the European Central Bank (ECB) was not impressed by the banking crisis and increased the key interest rate for the euro zone unchecked by 0.5 percentage points.
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Key interest rates: How does the US Federal Reserve decide?
Before the Fed’s decision on Wednesday, expectations were again tending in the direction of a slight increase in key interest rates in the US by 25 basis points to a range of 4.75 to 5.0 percent.
We give you an overview of the interest rate forecasts from leading commentators and analysts in the US for the Fed’s decision.
David Rubenstein, Carlyle Group:
The Fed’s most likely decision in March is a quarter-point hike in interest rates, he said Co-Chair of the private equity firm Carlyle Group, which manages many billions.
With an interest rate pause, the Fed would give the impression that the central bank had lost interest in fighting inflation. On the other hand, an increase of 0.50 percentage points would be too much for some banks at the moment.
“So I suspect 25 basis points is the most likely decision,” Rubenstein told Bloomberg.
‚Big Short‘-Investor Steve Eisman:
“A 0.50 percentage point hike is off the table,” Eisman said in the CNBC TV show “Fast Money”. “So the Fed will either do 0.25 percentage points or do nothing at all.”
He pointed out that investors should worry if the crisis in regional banks led to a pause in interest rate hikes. “If the Fed doesn’t hike rates (…) maybe the effect will be positive for a few hours or weeks,” he said.
Jeffrey Gundlach of DoubleLine Capital:
“I just don’t think the Fed is going to go 0.50 percentage points at this point. I would say 0.25″ Gundlach said on CNBC: “For the sake of credibility, they will probably hike rates by 0.25 percentage points. I think this will be the last increase.”
Allianz economist Mohamed El-Erian:
The collapse of the Silicon Valley bank will force policymakers at the Fed to abandon their aggressive monetary policy, said Allianz chief economist Mohamed El-Erian.
He pointed to the falling US bond yields as a key sign that the Fed is about to halt rate hikes.
“Since that SVB-related bailout beyond what many expected, markets see it as more than protecting deposits and small ones Techssaid El-Erian at Twitter.
Goldman Sachs
The US Investment Bank expects the Fed to pause on further rate hikeswill lay.
“Given the recent stress in the banking system, we no longer expect the FOMC to hike rates at its March 22 meeting amid significant uncertainty about the way forward,” Goldman Sachs analysts wrote.
Goldman still expects hikes of 0.25 percentage points each for the following meetings in May, June and July, leaving the interest rate in a range of 5.25 to 5.5 percent.
Dieser Artikel erschien zuerst bei Business Insider in den USA mit dem Titel: „The Fed is about to release its first policy decision since 3 banks collapsed. Here’s what high-profile commentators and analysts say it will do“. You can read the original here.
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