With the Federal Open Market Committee convening on Wednesday and the recent financial troubles facing the U.S. banking system, White House press secretary Karine Jean-Pierre said President Joe Biden has “confidence” in Federal Reserve chair Jerome Powell. Meanwhile, according to the CME Group’s Fedwatch tool, the target rate probability suggests the Fed will raise the federal funds rate by 25 basis points (bps) this week. There’s also a 26.9% chance the U.S. central bank won’t raise the rate this month.
Market Laser-Focused on Upcoming Fed Meeting; Biden Administration Confident in Powell’s Leadership
It has been a tumultuous week in the U.S. banking industry as three major banks collapsed, and the Federal Reserve announced that it would fully bail out two of them. Additionally, the U.S. central bank created the Bank Term Funding Program (BTFP) to assist failed banks and their depositors. Moreover, the Fed loaned the banks $164.8 billion to strengthen liquidity and collaborated on March 19 with five other major central banks to boost U.S. dollar liquidity.
To make matters worse, a recently published paper indicates that roughly 186 U.S. banks are grappling with the same problems as Silicon Valley Bank, and First Republic Bank’s stock plummeted on March 20, losing more than 40% of its value in a single day. In the meantime, on March 22, the Federal Open Market Committee (FOMC) and Fed chair Jerome Powell will determine the fate of the federal funds rate.
Prior to the banking industry fallout, the U.S. central bank had been raising the benchmark rate rap
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Author: Jamie Redman
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