PU Prime App

Exclusive deals on mobile

  • Market Insights  >  Weekly Outlook

23 March 2023,07:21

Weekly Outlook

Fed Takes Risk With Rate Hike Amid Banking Crisis

23 March 2023, 07:21

Share on:
Share on:

Investors hoping for a pause in rate hikes were disappointed as the U.S. Federal Reserve pushed ahead with a quarter-point hike at its interest rate decision on Wednesday. While way lower than 2022’s mega-hikes of 50 to 75 bps and in line with economist expectations, March’s 25-point hike is a calculated risk amid what is being termed the second-largest banking crisis in the U.S. – behind 2007’s collapse. 

While some have pointed to the Fed’s aggressive pace of hikes as a contributing factor to the recent spate of bank collapses – including venture capitalist favourite Silicon Valley Bank  – Fed Chair Jerome Powell has pointed out that it was the individual failure of SVB’s management to manage interest rate risks.

Meanwhile, the other major bank collapse, Credit Suisse, has been some time coming, with the embattled bank finally buckling under a series of scandals. 

For all the turmoil, lifelines have been thrown, with Credit Suisse being bought over by UBS in a deal brokered by the Swiss Central Bank; while U.S. regional bank collapses have been aided by an emergency plan from the Fed to maintain liquidity and safeguard customer deposits. 


The big question: is the Fed in safe territory after implementing a 25-point hike? Amid the banking crisis, the Fed still has not lost sight of inflation, with Powell signalling not to expect rate cuts this year.That said, the previously mentioned ongoing increases of rate hikes “will be appropriate”, for example, have been lessened to the current “additional policy firming may be appropriate” – giving mixed messages.

The markets seem to be betting on a more cautious Fed, with the dollar taking a downturn on comparatively less hawkish messaging. Treasury yields are also sinking, while gold prices have edged upwards – possibly due to a dipping dollar and investors flocking to safety on the Fed’s calculated risk. 

One other thing to consider is that the banking turmoil might have the effect of doing the Fed’s job for them. Interest rate hikes increase the cost of borrowing, which in turn, discourages spending and slowing the economy down. In the same vein, banks will start being much more cautious about lending – resulting in a similar effect to rate hikes. Whether this will be enough to cover ongoing inflation and lead the Fed to reconsider their view on rate hikes will remain to be seen.

Investors are reminded to look out for the next soonest measure of inflation, the Core PCE Price Index for February, which will be announced on Friday, 31 Mar at 15:30 (GMT+3).

As a  friendly reminder, do keep an eye on market changes, control your positions, and manage your risk well. 

Comience a operar con una ventaja

Opere en forex, índices, Rieles y mucho más con los diferenciales más bajos de la industria y ejecución ultrarrápida.

  • Empiece a operar con depósitos desde tan solo 50 $ en nuestras cuentas estándar.
  • Obtenga acceso a atención al cliente 24/7.
  • Acceda a cientos de instrumentos, herramientas educativas gratis y algunas de las mejores promociones del sector.
Únase ahora

Latest Posts

Apertura de cuenta rápida y sencilla

Crear una cuenta en vivo
  • 1


    Regístrese para obtener una cuenta en vivo de PU Prime con nuestro sencillo proceso.

  • 2


    Deposite fondos en su cuenta sin esfuerzo con una amplia selección de canales y monedas aceptadas.

  • 3

    Empezar a operar

    Acceda a cientos de instrumentos en condiciones de trading líderes en el mercado.

Please note the Website is intended for individuals residing in jurisdictions where accessing the Website is permitted by law.

Please note that PU Prime and its affiliated entities are neither established nor operating in your home jurisdiction.

By clicking the "Acknowledge" button, you confirm that you are entering this website solely based on your initiative and not as a result of any specific marketing outreach. You wish to obtain information from this website which is provided on reverse solicitation in accordance with the laws of your home jurisdiction.

Thank You for Your Acknowledgement!

Ten en cuenta que el sitio web está destinado a personas que residen en jurisdicciones donde el acceso al sitio web está permitido por la ley.

Ten en cuenta que PU Prime y sus entidades afiliadas no están establecidas ni operan en tu jurisdicción de origen.

Al hacer clic en el botón "Aceptar", confirmas que estás ingresando a este sitio web por tu propia iniciativa y no como resultado de ningún esfuerzo de marketing específico. Deseas obtener información de este sitio web que se proporciona mediante solicitud inversa de acuerdo con las leyes de tu jurisdicción de origen.

Thank You for Your Acknowledgement!