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Experts are wondering what the Fed's decision will be after the collapse of 3 banks


March, 20 2023
watermark Economic news

This week's meeting of the US Federal Reserve System will be the first since a wave of bank failures swept the world and created chaos in the currency markets.


Now many analysts are wondering what will happen next with the key rate of the US central bank. Most believe that the Fed will raise the rate by 25 basis points, to a range of 4.75-5%, at its meeting on March 22.


If the rate is raised, it will be the ninth increase in a row to combat inflation, which significantly exceeds the Fed's 2% target. Today, inflation in the country is 6%. 


David Rubenstein, co-chairman of the private investment company Carlyle Group, believes that the Fed will raise the rate by a quarter of a percentage point, followed by a pause in the increase cycle. Analysts consider raising the rate by 50 basis points at once too tough for some banks at this stage.


Investor Steve Eisman also suggests that the Fed will manage to raise the rate by 25 basis points, while 50 is not even discussed. 


A number of economists also believe that the recent collapse of the SVB will force policymakers to abandon tight monetary policy, while the fall in US bond yields is a key sign that the Fed will eventually stop raising rates.


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