Lower interest rates in the United States “thanks” to the crisis in the banking sector. This was stated by Federal Reserve Chairman Jerome Powell during an event in Washington. “Interest rates may not rise as much as they should because of the bank credit crunch,” he said.
“Having come a long way, we can afford to look at the data and the evolution of prospects and make careful assessments,” said Powell, referring to the 10 consecutive rate hikes by the US central bank.
On 3 May, the Fed raised the reference rate by 0.25% as expected, bringing it to 5-5.25 per cent. The vote in favor of the new tightening was unanimous.
However, the US central bank has hinted that the pace of tightening could slow down and have come close to peaking.
The market is betting on tight break
Traders now give a 22.4% chance that the Fed will decide to hike interest rates again by 25 basis points at its next meeting, scheduled for June 13-14. Yesterday, the chance was 35.6%. What weighs more than the words of the president of the Fed, Jerome Powell, who underlined how rates will be ‘curbed’ by the banking crisis, is the interruption of the negotiations between Republicans and Democrats on the debt; without a deal, the US could default as early as early June.