Fed rate hike campaign in question as bank stocks swoon

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The Federal Reserve, which just last week was expected to accelerate its interest-rate-hike campaign in the face of persistent inflation, may be forced to hit pause and even reverse course as turbulence at Credit Suisse renews fears of a banking crisis that could cripple the U.S. economy.

And understandably so, as investors sought to make sense of fast-moving events including Friday's failure of Silicon Valley Bank, the creation over the weekend of an emergency Fed backstop for the banking sector, fresh data showing slow progress in the inflation fight, and a renewed banking stock swoon on Wednesday.

A pause, he argued, risks undoing the work of the Fed's 4.5 percentage points of rate hikes since last March. "They’d also risk sending a signal to the market that the macroeconomic impact of these microeconomic phenomena is worse than we think," he said."Financial crises create demand destruction," Rosengren said on Twitter. "Banks reduce credit availability, consumers hold off large purchases, businesses defer spending.

"It's conceivable that we've seen the peak in market interest rates this cycle," said John Lynch, chief investment officer for Comerica Wealth Management.

 

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Average citizen doesn't own 'bonds' in their portfolio worth millions/billions. The risk takers took their risk its their problem IMO. Central banks should continue to raise int rate as they see fit

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