March Fed Meeting Preview: The Fed Raises Rates After Silicon Valley Bank Blowup.
After the Silicon Bank crisis we discussed in our previous article series, many are saying that it’s time to pause rates for at least this upcoming decision. However, we may only see a lighter BPS rate hike of 0.25 or 0.50 basis points. What are the FED odds of a lower rate hike decision? As of Tuesday morning, markets were pricing in about 83% odds that the FED is going to announce a 25-basis-point hike, which in turn would lift the federal funds rate to the range of 4.75%-5%.
As the Fed tightens its monetary policy, borrowing costs for consumers and businesses will continue to rise, and more banks could collapse, potentially affecting economic growth further. While the rate hikes may help mitigate inflationary pressures, there is a huge risk of unintended consequences. Investors and businesses alike will need to carefully monitor the Fed’s actions and adapt their strategies accordingly. This may be the most important news we’ll see so far this year.
The FED meeting concludes on Wednesday with the 2 p.m. EDT (1800 GMT) release of a new policy statement. Twitter CEO Elon Musk even jumped in, on Twitter, of course, calling for the Fed to cut rates this week:
Fed needs to drop the rate by at least 50bps on Wednesday
— Elon Musk (@elonmusk) March 21, 2023
