The Federal Reserve is expected to use its monetary policy decisions on Wednesday to send a message that the economic outlook remains strong enough to handle further interest rate hikes despite woes in the banking sector.
This market-affirming message, along with remarks stressing that the banking system is sound and the Fed is ready to provide liquidity will be aimed at bolstering confidence.But the Fed also has to provide its forecast of the future path of interest rate hikes and these might be hard for the market to digest.
In the next six weeks, the data came to him and the “higher for longer” rate strategy was priced in, until the collapse of Silicon Valley Bank earlier this month, Reinhart said.“If markets snapped to where the Fed is, that would be a big tightening move”, he said