March FOMC Meeting – Balancing Inflation and Bank Stability

Most economists predict that the U.S. Federal Reserve will increase interest rates by 25 basis points on March 22, despite recent turmoil in the banking sector.  
Although there is a chance that there may be a pause in the rate hike this month, the likelihood of a hike is greater, and the central bank may opt for more restraint. 

Considering the recent failures of Silicon Valley Bank, as well as concerns about a possible regional banking crisis, investors are worried about the potential for financial contagion.  
In contrast to the 2008 financial crisis, the Federal Reserve now has additional tools to address bank issues that are separate from interest rate hikes. Banks are also currently well-capitalized, but the Fed’s efforts to combat inflation may not be proceeding as well as expected.  
As a result, it would be prudent for the Fed to hold some resources in reserve to prepare for any potential future emergencies. 
Investors should pay closer attention to the US Federal Reserve’s statement on the current bank crisis in the US, as it is likely to have a greater impact on the markets than changes in interest rates alone.  
Therefore, in addition to monitoring interest rates, investors should also consider the Fed’s commentary on the ongoing bank crisis and their plans to address the recent string of bank failures. 
In summary, effectively managing inflation and banking crises requires a combination of monetary, fiscal, and regulatory policies to ensure stability and promote long-term growth in the economy. 

FOMC Economic Projections, FOMC Statement & Federal Funds Rate will be released today at 19.00 GMT+1. 

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