Will the Federal Reserve keep raising interest rates as the banking industry walks on eggshells following the collapse of Silicon Valley Bank and Signature Bank earlier this month?
The anticipation is killing Fed watchers and investors alike.
Today we finally get the answer.
Before the recent bank failures, some economists and politicians urged the Fed to stop raising interest rates, fearing it could trigger a recession. Even with signs that the US economy is cooling and prices are decelerating, Fed officials including Chairman Jerome Powell signaled that the central bank is likely to raise interest rates by as much as 50 basis points at its March meeting to continue curbing stubborn inflation.
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But after the recent bank failures, economists at Goldman Sachs said they didn’t expect the Fed to raise rates in March due to fears it would overburden banks.
However, if the Fed does not change rates, it risks losing the fight against inflation, which showed little improvement from January to February. Inflation remains more than three times the Fed’s 2% target.
Stay tuned for real-time updates leading to the Fed’s important decision today:
When will the Fed announce a rate hike?
If the Fed raises interest rates, it will announce it at 2:00 pm ET today.
When does Jerome Powell speak?
Powell will hold a press conference at 2:30 pm ET.
Fed futures on the chances of a rate hike
Everyone agrees that the Fed will raise interest rates by 0.25%.
As of Tuesday afternoon, the Chicago Mercantile Exchange’s FedWatch tool, which uses future federal funds futures contracts to predict rate decisions, had an 86% chance of that happening.
Meanwhile, the likelihood that the Fed would keep rates unchanged was about 14%.
Before the banking crisis hit, those odds looked very different. The probability of a 0.50% increase in the Fed was 24%, the probability of 0.25% was 76%, and the probability of a pause was 0%.
How many banks failed in 2023?
Two FDIC-insured banks, Silicon Valley Bank and Signature Bank, have failed this year. The FDIC took over both banks and promised to protect all depositors even if their account balances exceeded the traditional $250,000 insurance limit.
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2-year Treasury yield
Yields on 2-year Treasury bonds rose shortly after the bond market opened at 8 am ET Wednesday morning.
Despite the banking crisis rocking the stock market, Bitcoin has fared particularly well. As of Wednesday morning, it is up over 16% and trading at over $28,000.
Dow Jones futures
Trading in futures for the Dow Jones Industrial Average fluctuated slightly about an hour before the opening of trading.
bond interest rate
Note I, inflation-protected U.S. Treasury bills issued from November to April, carry a composite interest rate of 6.89%.
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Current Fed Funds Rate
The Fed is currently targeting an interest rate range of 4.5% to 4.75%.
When is the next Fed meeting?
The next Fed meeting will take place on May 2-3. Here is the schedule of the remaining meetings for the year:
When does the Fed meet to discuss rates?Federal Reserve Chart for 2023
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Elizabeth Buchwald is USA TODAY’s personal finance and markets correspondent. You can fFollow her on Twitter @BuchElisabeth and subscribe to our Daily Money newsletter here.
This article originally appeared in USA TODAY: When will the Fed’s interest rate decision come out? Live updates