Skip to main content
PGIM LogoPGIM Logo
bricks
Article

Fed Lifts Rates as Bank Stress Clouds OutlookFedLiftsRatesasBankStressCloudsOutlook

Mar 23, 2023

Share
  • Mail
  • LinkedIn
  • Twitter
  • Copy URL

Share

The Federal Reserve entered wait-and-see mode after lifting rates by a quarter-point on Wednesday, as policymakers grapple with dueling challenges of inflation and stress on the financial system. A bank crisis that kicked off with the collapse of Silicon Valley Bank injected fresh uncertainty into the economic and policy outlook. While efforts to bolster the banking sector – including the UBS takeover of Credit Suisse – have allayed fears of contagion, Fed Chair Jay Powell noted that a potential tightening of financial conditions brought on by banking stress could have a similar effect on the economy as rate hikes. In its statement, the Fed said it “anticipates that some additional policy firming may be appropriate” to cool inflation, a change from its previous forecast for “ongoing” rate increases.

However, the latest rate hike signaled that tamping down inflation, which continues to run well above the 2% target, remained a priority for the Fed amid concerns that a prolonged fight will allow runaway price growth to become entrenched. In the UK, where data showed inflation accelerated last month, the Bank of England also raised rates by a quarter-point on Thursday. The Fed left its projection for the fed funds rate in 2023 unchanged, suggesting it expects one additional hike of 25 basis points before the end of the year. Powell added that policymakers do not currently foresee rate cuts this year, contrary to market expectations. In a new video, Ed Campbell of PGIM Quantitative Solutions recaps the Fed’s actions this week and why investors viewed the rate decision as a dovish hike.

Watch video
Learn More
Markets in Motion

Timely insights from across PGIM

Learn More

You may also like

Inflation Keeps Pressure on Fed Despite Bank Crisis
Article

Inflation Keeps Pressure on Fed Despite Bank Crisis

Mar 15, 2023

The fallout from Silicon Valley Bank’s demise complicates the Federal Reserve’s path toward fulfilling its mandate to keep prices stable.

Markets Whipsaw after Silicon Valley Bank Collapse
Article

Markets Whipsaw after Silicon Valley Bank Collapse

Mar 13, 2023

Silicon Valley Bank's sudden collapse adds a new wrinkle in the outlook for monetary policy.

Market Recalibrates After Powell Warns of Bigger Rate Hikes
Article

Market Recalibrates After Powell Warns of Bigger Rate Hikes

Mar 9, 2023

After slowing its pace of rate hikes, the Federal Reserve may get back on the throttle in response to resilient economic activity.

PGIM Logo
  • Terms & Conditions
  • Privacy Center
  • Accessibility Help
  • UK Regulatory Disclosures
  • Netherlands Regulatory Disclosures
  • Canadian Regulatory Disclosures
  • Ireland Gender Pay Gap Report
  • Cookie Preference Center

For Professional Investors only.* All investments involve risk, including the possible loss of capital.

This material is for informational and educational purposes only and should not be construed as investment advice or an offer or solicitation in respect of any products or services to any persons who are prohibited from receiving such information under the laws applicable to their place of citizenship, domicile or residence. PGIM is the principal asset management business of Prudential Financial, Inc. and a trading name of PGIM, Inc. and its global subsidiaries. PGIM, Inc. is a registered investment adviser with the U.S. Securities and Exchange Commission (“SEC”). Registration with the SEC does not imply a certain level of skill or training.

The information on this website is not intended as investment advice and is not a recommendation about managing or investing your retirement savings. In making the information available on this website, PGIM, Inc. and its affiliates are not acting as your fiduciary.    

In the United Kingdom, this website may be issued by PGIM Private Alternatives (UK) Limited or PGIM Private Capital Limited.  In the European Economic Area (“EEA”), this website may be issued by PGIM Private Capital (Ireland) Limited or PGIM Luxembourg S.A. or PGIM Real Estate Germany AG.

PGIM, Inc. has its headquarters at 655 Broad Street, Newark, NJ 07102. PGIM Private Capital (Ireland) Limited has its registered office at IDA Business Park, Letterkenny, Co. Donegal, F92 FP83, Ireland. PGIM Private Capital (Ireland) Limited is authorised and regulated by the Central Bank of Ireland and registered in Ireland under company number 635793 operating on the basis of a European passport. PGIM Limited and PGIM Private Alternatives (UK) Limited have their registered offices at Grand Buildings, 1-3 Strand, Trafalgar Square, London WC2N 5HR. PGIM Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) of the United Kingdom (Firm Reference Number: 193418). PGIM Private Alternatives (UK) Limited is authorised and regulated by the FCA of the United Kingdom (Firm Reference Number: 181389). PGIM Private Capital Limited has its registered address at 1 London Bridge, London SE1 9BG and is authorised and regulated by the FCA of the United Kingdom (Firm Reference Number: 172071). PGIM Luxembourg S.A., Netherlands Branch is registered with the Netherlands Chamber of Commerce under number 85998877 and has its local offices at Gustav Mahlerlaan 1212, 1088LA Amsterdam, The Netherlands. PGIM Luxembourg S.A. has its registered address at 2 Boulevard de la Foire, L-1528 Luxembourg and is authorised and regulated by the Commission de Surveillance du Secteur Financier (“CSSF”) in Luxembourg (registration number A00001218). PGIM Real Estate Germany AG has its registered address at Wittelsbacher Platz 1, 80333 Munchen, Germany and is authorised and regulated by Bundesanstalt für Finanzdienstleistungsaufsicht (“BaFin”) in Germany (registration number 10138142).

In Japan, information is provided by PGIM Japan Co., Ltd. (“PGIM Japan”) and/or PGIM Real Estate (Japan) Ltd. (“PGIMREJ”).  PGIM Japan, a registered Financial Instruments Business Operator with the Financial Services Agency of Japan offers various investment management services in Japan.  PGIMREJ is a Japanese real estate asset manager that is registered with the Kanto Local Finance Bureau of Japan.

In Hong Kong, information is provided by PGIM (Hong Kong) Limited, a regulated entity with the Securities & Futures Commission in Hong Kong to professional investors as defined in Section 1 of Part 1 of Schedule 1 of the Securities and Futures Ordinance (Cap. 571). In Singapore, information is issued by PGIM (Singapore) Pte. Ltd. (“PGIM Singapore”), a regulated entity with the Monetary Authority of Singapore under a Capital Markets Services License to conduct fund management and an exempt financial adviser. This material is issued by PGIM Singapore for the general information of “institutional investors” pursuant to Section 304 of the Securities and Futures Act 2001 of Singapore (the “SFA”) and “accredited investors” and other relevant persons in accordance with the conditions specified in Section 305 of the SFA. In South Korea, information is issued by PGIM, Inc., which is licensed to provide discretionary investment management services directly to South Korean qualified institutional investors on a cross-border basis.   

Prudential Financial, Inc. (“PFI”) of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom. 

*PGIM.com/Podcasts and its content is intended for informational or educational purposes only and is not directed exclusively to Professional Investors. 

You are viewing this page in preview mode.

Edit Page