Could There Be Only One More Rate Hike This Year?
The Federal Reserve announced today that it has increased interest rates by 0.25 percentage points, despite the current turmoil in the banking sector. Today’s rate hike increased the federal funds target rate range to 4.75% – 5%.
Following the announcement, Federal Reserve Chairman Jerome Powell commented on the current situation, stating:
When asked by a reporter for his take on the Silicon Valley Bank collapse, Powell highlighted the following key points:
JEROME POWELL ON THE SILICONE VALLEY BANK COLLAPSE $SIVB
1) THE BANKS MANAGEMENT FAILED BADLY
2) THE BANK EXPANDED VERY QUICKLY
3) SVB EXPERIENCED AN UNPRECEDENTED BANK RUN AT A FASTER PACE THAN EVER
4) POWELL SAYS HE IS GOING TO SUPPORT STRONGER BANKING REGULATIONS
— GURGAVIN (@gurgavin) March 22, 2023
Before recent events, which saw the collapse of two U.S. regional banks, Powell disclosed that the Fed was prepared to continue increasing interest rates by 50 BPS points and further throughout 2023.
Moving forward, Powell indicated that further hikes would depend on incoming data. However, following today’s announcement and new conference, the majority feel that the end of rate hikes is near.
Initially, markets reacted positively to today’s news and Powell’s brief speech. However, the gains were shorted lived as markets reversed, with the S&P 500 (-1.65%), NASDAQ (-1.60%) and DJIA (-1.63%) all closing in the red.
Chart Source: TradingView.com
Featured Video Source: Global News YouTube
Disclaimer: Wealthy VC does not hold a position in any of the stocks mentioned in this article.