Will the Federal Reserve continue to hike interest rates as the banking industry walks on eggshells after the implosion of Silicon Valley Bank and Signature Bank earlier this month?
The anticipation is killing Fed watchers and investors alike.
Today we’ll finally get an answer.
Before the recent bank failures, some economists and policymakers had been calling on the Fed to stop hiking interest rates over fears it could cause a recession. Even with signs that the U.S. economy was cooling off and that soaring prices were slowing, Fed officials, including Chair Jerome Powell, signaled the central bank would likely raise interest rates by as much as a 50 basis point at its March meeting to continue curbing stubborn inflation.
Will the Fed hike interest rates?: 4 reasons Fed will raise rates again amid SVB crisis, 4 reasons it won’t
2023 banking crisis:Close to 190 banks could face Silicon Valley Bank’s fate, according to a new study
But after the recent bank failures, economists at Goldman Sachs said they didn’t expect the Fed to raise rates in March over concerns that it would put undue stress on banks.
However, if the Fed doesn’t change rates, it could risk losing the fight against inflation, which showed minor improvements from January to February. Inflation remains more than three times the Fed’s 2% target.
Follow along for live updates leading up to the Fed’s crucial decision today:
When is the Fed announcement today?
If the Fed raises interest rates it will announce it at 2 p.m. ET today.
When is Jerome Powell speaking?
Powell will hold a press conference at 2:30 p.m. ET.
Stock market today
Stocks opened slightly lower ahead of the Fed’s decision on interest rates. The Dow Jones Industrial Average, S&P 500 and Nasdaq shed less than 0.2% around 9:45 a.m. ET.
Mortgage rates today
At the beginning of the month, the average annual percentage rate (APR) for a 30-year fixed mortgage is 6.77%. This is more than double the 3.22% rate we saw at the beginning of 2022 and up from 6.55% the week prior.
Mortgage rates and the Fed: Housing market is ‘overly sensitive’ to Fed rate hikes. Experts weigh in on what’s next.
Current mortgage rates details: How to shop for mortgage rates, more
First Republic Bank stock
Shares of First Republic Bank opened down around 3%. Late Tuesday night The Wall Street Journal reported that the troubled regional bank tapped Lazard, a financial advisory group, to help it review strategic options that could include a sale according to people familiar with the matter.
This comes a week after First Republic received a $30 billion capital infusion for major U.S. banks including Bank of America, Citi and JPMorgan.
Powell speech today: What will he say?
It’s anyone’s guess what Powell will tell reporters at his press conference following the rate decision announcement.
Economists at Deutsche Bank, who predict the Fed will raise rates by a quarter percentage point, think Powell will use his time at the mic to “emphasize the heightened uncertainty about the outlook given recent events.”
“He will also reinforce that the banking system remains sound and the Fed stands ready to provide liquidity as needed,” Deutsche Bank economists said in a note to clients earlier this week.
JPMorgan economists also believe the Fed will hike rates by a quarter point. They predict he will spend a considerable amount of time during his press conference walking reporters through the Fed’s plan to lower inflation, in addition to addressing the current state of banking.
Fed rate hike probability
The consensus is that the Fed will hike interest rates by 0.25%.
As of Tuesday afternoon, there was an 86% chance of that happening, according to the Chicago Mercantile Exchange’s FedWatch Tool, which uses future Fed funds futures contracts to inform rate decision forecasts.
Meanwhile, there was around a 14% chance the Fed will hold rates steady.
Before the banking crisis unfolded, those odds looked quite different. There was a 24% chance the Fed would hike by 0.50% and a 76% chance of a 0.25% and a 0% chance of a pause.
How many banks have failed in 2023?
Two FDIC-insured banks, Silicon Valley Bank and Signature Bank, have failed this year. The FDIC took over both banks and vowed to make all depositors whole even if their account balances exceeded its traditional $250,000 insurance cap.
Housing market and rates: Housing market is ‘overly sensitive’ to Fed rate hikes. Experts weigh in on what’s next.
How retirees can cope with a bad market: Recovering from crushing inflation, rate hikes and bank failures
2-year Treasury yield
Yields on 2-year Treasury notes are up Wednesday morning. As of 9:46 a.m. ET they hovered above 4.2%. At the onset of the banking crisis around two weeks ago, yields shot up to 5%. The last time 2-year yields were at that level was 2007.
Bitcoin price
Even though the banking crisis has roiled the stock market, Bitcoin has performed especially well. It’s up more than 16% as of Wednesday morning and was trading at over $28,000.
I bond interest rate
I bonds, inflation-protected U.S. Treasuries, issued from November through April have a composite interest rate of 6.89%.
Can I purchase I bonds with refund?: What to know about rates, deadline, restrictions
The case for I bonds: Why I doubled down on I bonds to protect my sons’ inheritance from inflation
Current Fed funds rate
The Fed is currently targeting an interest rate range between 4.5% to 4.75%.
When is the next Fed meeting?
The Fed’s next meeting is May 2-3. Here’s a schedule of the remaining meetings for the year:
-
June 13-14
-
July 25-26
-
September 19-20
-
Oct/Nov 31-1
-
December 12-13
When does the Fed meet to talk rates?The Federal Reserve’s 2023 schedule
Fed meeting agenda:Here’s what to know and when to expect a rate change.
Powell talks inflation: Fed chair testifies before Senate on inflation, speeding up rate hikes
When is the next Fed interest rate decision?
The next Fed interest rate decision will come out on May 3.
Elisabeth Buchwald is a personal finance and markets correspondent for USA TODAY. You can follow her on Twitter @BuchElisabeth and sign up for our Daily Money newsletter here
This article originally appeared on USA TODAY: Fed meeting today: Live updates on interest rate decision, stocks
