Here's why the Silicon Valley Bank crash has made a recession much more likely in 2023
are pricing in 75 basis-points of rate cuts by the end of 2023. That suggests markets see the need for significant monetary easing by year-end, a sign investors believe the Fed will soon be worrying about softening the blow of a downturn.
While this could be taken as a signal that a recession could be less likely, given that commentators have said pushing interest rates any higher will overtighten the economy, the Fed would be making a pivot in response to stress on the wider system. If rates are too low, it could hamper the goal of bringing down inflation, which remains the chief concern for the economy even in light of the banking turmoil.
"It's a real warning shot about the health of the financial system. It might be limited to that one bank. It might more widespread. It might filter off into other issues," he warned.
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