SVB Fallout
Fed Battle Plan for Inflation Shredded by Financial Turmoil
- Powell’s threat to speed up rate hikes now looks dated
- Case for rate caution strengthened, Goldman sees March pause
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Federal Reserve Chair Jerome Powell’s strategy to speed up the central bank’s inflation-fighting efforts is unraveling in the wake of Silicon Valley Bank’s collapse.
A week ago, Powell surprised markets by saying the Fed may need to raise interest rates at a faster pace than the quarter-point hike it delivered in February to curb stubbornly persistent inflation. Days later, SVB and Signature Bank failed, and the Treasury and Fed launched a vast emergency lending facility saying more banks faced the risk of runs.