With just a few days to go until the Federal Reserve’s next interest rate decision, US policymakers are sitting between a rock and a hard place
. The recent banking sector meltdown, triggered partially by Silicon Valley Bank crumbling under the weight of higher interest rates, has led some economists and analysts to call for a moratorium on rate hikes until the industry sorts itself out.
The predictions: The majority of investors are betting that the Fed will hike rates by a quarter point next week, though a significant minority are pricing in a pause in hikes, according to the CME FedWatch tool. Prior to the current stress in the banking sector, Fed officials were hinting that they would hike rates by half a point. Investors now think there’s a 0% chance of that happening. But Wall Street might be due for a surprise on Wednesday, say some economists.
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