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By Keith WADE, Chief Economist Strategist, Schroders
The banking crisis is a sign that tighter policy is biting and in our view will tame inflation once the lagged effects have been allowed to come through.
The Federal Reserve (Fed) raised the key Fed funds rate at its latest meeting by 25 basis points (bps) to 5% on its upper bound. The move comes after a tumultuous week in which rate expectations for the meeting moved from a 50 bps hike after chair Powell’s Congressional testimony, to only a 50/50 chance of a quarter point. There had been speculation the Fed would pause or even cut rates in response to the failure of Silicon Valley Bank and Signature Bank.
In his press conference chair Powell highlighted the actions...
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