© Reuters.
Investing.com – Fed member James Bullard is speaking now after the Fed’s decision to raise the rate by 25 basis points to 5%, the highest rate since 2007.
Bullard said it’s still up, and US data is stronger than expected, indicating that the Fed may be sticking to a rate hike at the next meeting.
Here comes the discrepancy between market expectations that the Fed will cut interest rates by 100 basis points in June, while the Fed does not see any cut until 2024.
The Fed is trying to isolate the Silicon Valley crisis from the scene. “Silicon Valley is an unusual case,” says Bullard. He stresses strongly that it is difficult to find other banks in a similar situation.
Regarding the Credit Suisse crisis, Pollard says that the markets have so far welcomed the merger of Credit Suisse with UBS. While Europe today is facing a different reality, amid fears of the collapse of another large bank, Deutsche Bank (ETR:), whose shares lost 13% of their value after the high costs of insurance against default.
The banking sector index reaches its lowest level since November 2020, down 2% so far.
The situation now, says Pollard, is very different from what it was in 2008-2009.
Meanwhile, it is down 0.26% to 1,990 for the futures contract. In spot contracts, gold records 1,989 an ounce.
He added that the Fed’s abandonment of targeting the inflation rate at 2% is a disastrous option, and it will take us back to 1970.
The most prominent statements:
- – Bullard sees an 80% chance that financial tensions will subside, and the talk will turn to inflation again, with a low probability of a recession.
- – Bullard believes that if the economy appears weak, the Fed will respond to that.
- – Bullard puts the interest range between 5% to 5.75% in response to the strength of the economy, and assuming that financial tensions subside.
- Bullard says the Fed chairman will make a tactical decision when to raise interest rates next.
- Bullard points out that Fed members’ expectations suggest only one rate hike at the next meeting or “immediately after.”
