The Silicon Valley Bank debacle suddenly changed the outlook for interest rates in 2023
It also shook up expectations for the Federal Reserve's next move to curb the country's inflation problem.
The Fed has increased interest rates eight times over the last year to keep prices from rising too quickly, and since December, it has slowed the pace of hikes as it works to achieve its goal of getting inflation to its 2% goal. The central bank has made clear that interest rate cuts will not happen this year, and Fed Chair Jerome Powell has repeatedly stated that raising borrowing costs will be necessary this year as the central bank continues to fight inflation.
The pace and duration of those interest rate hikes is at the top of mind for markets and investors.
The collapse of SVB on Friday reversed predictions of such a hawkish Fed. After vacillating much of Monday, investors seem to have settled their bets: There will be a 28.4% chance the Fed will hold rates steady, while giving a 25 basis point hike a 71.6% probability, as of 1:58 PM EST Tuesday afternoon. Investors now think a larger 50 point hike is out of the question.Investors expect the Fed to back off its aggressive rate hikes because these indirectly caused SVB's collapse.
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
SVB collapse: The Treasury must make whole SVB investorsThe Treasury Department is right to ensure that investors at Silicon Valley Bank have access to their deposits.
Read more »
SVB's rescue means the Fed won't hike rates in March, says Goldman SachsOne casualty of regulators rescuing SVB depositors? There will be no March rate hike, says Goldman Sachs.
Read more »
Treasury yields plunge as SVB fallout seen slowing Fed rate hikesThe U.S. 2-year bond yield has shed more than 80 basis points in three sessions as expectations for a 50 basis point rate increase by Fed in March evaporate.
Read more »
SVB: Fed will be forced to surrender on rate hikes, says El-ErianThe Fed will be forced to surrender on rate hikes after SVB's failure, says top economist Mohamed El-Erian
Read more »
SVB collapse: Fed's plans for rate hikes fall by the waysideThe debacle with the federal government’s intervention in Silicon Valley Bank’s failure makes it increasingly likely that the Federal Reserve will hold off on raising interest rates next week.
Read more »
SVB collapse: Markets see potential pause in Fed rate hikesMarkets think the odds that the Fed pauses rate hikes at its upcoming meeting have shot up after Silicon Valley Bank's failure
Read more »