The market expects the Fed to raise interest rates by 1 yard, and U.S. stocks were mixed after the opening bell on Wednesday.
(AFP)
Worried about interest rate hikes causing operating pressure on financial institutions, U.S. stocks were mixed in early trading
[Compile Lu Yongshan/Comprehensive Report] The US Federal Reserve (Fed) will announce its interest rate decision at 2:00 p.m. Eastern Time on Wednesday (2:00 a.m. Taiwan Time Thursday). The market expects the Fed to raise interest rates by one yard (0.25 percentage points), but it will face challenges in assuring the market that it has the ability to prevent the deterioration of the banking crisis; Fed Chairman Jerome Powell will hold a press conference at 2:30. Focus and cause a political storm.
U.S. stocks were mixed after the open on Wednesday.
The Fed is also trying to reassure markets and prevent bank runs from getting worse as it mulls using interest rate policy to curb inflation.
The concern is that higher rates could put further pressure on financial institutions to lend less, hurting small and medium-sized businesses and other borrowers.
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Bank of America chief U.S. economist Michael Gapen (Michael Gapen) said that a wide range of overall economic data shows that further interest rate hikes are appropriate, but the Fed must take a two-pronged approach and use the power of lender of last resort to calm the possibility of further loss of small and medium-sized bank deposits. Fear; Powell is expected to explain that the Fed is raising interest rates to fight inflation and reassure markets that it has other tools at its disposal to protect financial stability.
The Fed is expected to raise interest rates by a quarter, bringing rates to four.
Between 75% and 5%.
Gabon pointed out that when the Fed announces the interest rate dot plot, it will raise the end-point rate of this year to 5.5%.
4%, higher than the 5.5% estimated in December last year.
one%.
Zhang Zhiming, chief investment officer of the Rockefeller Global Family Office, said that the Fed is expected to raise interest rates by one yard to inject confidence, but it will signal that the cycle of raising interest rates has been completed, and the stock market will therefore rise sharply.
Markets bet on 1 percentage point rate cut by year-end
Diane Swonk, chief economist of Anhou Jianye, said that the Fed may suspend interest rate hikes due to economic uncertainty, and the tightening of financial conditions caused by the successive failures of banks such as SVB may affect the Fed.
A rate hike of five percentage points, which could lead to a rate cut later this year.
The interest rate futures market has bet that the Fed will cut rates by a percentage point by the end of the year.
SVB crisis MPs call for war criminals to be brought out
In addition, the Fed's negligence of the SVB crisis will also become the focus of Powell's questioning at the press conference.
Republican Senator Scott Scott had previously sent a letter to Powell asking him to address the "regulatory failure and malfeasance" of SVB and other bank failures and fire those responsible; San Francisco Fed President Daly, who oversees the SVB, has lost confidence.
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