{"id":88097,"date":"2023-03-21T18:08:18","date_gmt":"2023-03-21T18:08:18","guid":{"rendered":"https:\/\/tahrir2day.com\/news\/2023\/03\/21\/the-us-interest-rate-decision-the-world-is-watching\/"},"modified":"2023-03-21T18:08:18","modified_gmt":"2023-03-21T18:08:18","slug":"the-us-interest-rate-decision-the-world-is-watching","status":"publish","type":"post","link":"https:\/\/tahrir2day.com\/news\/2023\/03\/21\/the-us-interest-rate-decision-the-world-is-watching\/","title":{"rendered":"The US interest rate decision the world is watching"},"content":{"rendered":"
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The world economy is facing a series of problems – and all eyes are pointing in one direction: America.<\/b><\/p>\n<\/div>\n

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Two US bank failures this month have raised concerns about the health of the financial system.<\/p>\n<\/div>\n

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The slumps follow a sharp rise in global borrowing costs, led by the US, that has rattled the global economy and raised concerns of a painful downturn known as a recession.<\/p>\n<\/div>\n

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The US Federal Reserve is at the heart of the crisis.<\/p>\n<\/div>\n

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For the last year, Federal Reserve authorities have been leading the charge in raising interest rates as they struggle to stem the price hikes that are driving up the cost of living.<\/p>\n<\/div>\n

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As risks to the economy mount, can this campaign continue?<\/p>\n<\/div>\n

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  • Global bank stocks plummet despite Biden’s assurances <\/li>\n
  • Is this a banking crisis – how worried should I be?<\/li>\n<\/ul>\n<\/div>\n<\/div>\n
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    Just two weeks ago, Chairman Jerome Powell warned that the bank may have to raise interest rates further and faster than expected, citing concerns that progress on stabilizing prices has stalled.<\/p>\n<\/div>\n

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    The rate at which prices are rising was 6% in the 12 months to February – far above the 2% rate considered healthy.<\/p>\n<\/div>\n

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    But the recent banking turmoil has many investors betting that the Fed will be particularly keen not to surprise financial markets with a big move. <\/p>\n<\/div>\n

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    Many analysts expect officials to hike rates by 0.25 percentage point — or perhaps not hike at all.<\/p>\n<\/div>\n

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    Whatever the decision, Mr. Powell is sitting squarely in the hot seat with little chance of satisfying his many critics.<\/p>\n<\/div>\n

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    “This is probably the toughest decision the Fed has had to make in a while,” said Ryan Sweet, chief economist at Oxford Economics, who expects a 0.25 percentage point hike.<\/p>\n<\/div>\n

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    He says Mr Powell will have to “play the two-handed economist perfectly” to convince investors that the central bank can still raise rates to fight inflation while using other tools to combat stress in the financial system .<\/p>\n<\/div>\n

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    “The biggest challenge is going to be communication, and the Fed doesn’t have a really good track record.”<\/p>\n<\/div>\n

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    Mr Powell, a lawyer appointed by former President Donald Trump to head the Fed, has already had work to do to restore credibility after describing the price hikes beginning to hit America in 2021 as “temporary”. .<\/p>\n<\/div>\n

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    The bank failures have heightened the scrutiny by focusing on the cost of the rapid rate-hike campaign while raising questions about whether the Federal Reserve has been lax in its oversight.<\/p>\n<\/div>\n

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    Senator Elizabeth Warren, a progressive Democrat who has long criticized Mr Powell’s response to inflation, has accused him of maintaining an “astounding list of failings” including flawed oversight. <\/p>\n<\/div>\n

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    She said this week she doesn’t think he should stay in his post.<\/p>\n<\/div>\n

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    And while the reasoning is different, criticism of Mr. Powell has also grown louder on Wall Street and in Silicon Valley.<\/p>\n<\/div>\n

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    \u201cThe Fed should have reacted to inflation six months earlier and then raised rates more slowly. Instead they slammed on the brakes and now we have a car crash,” venture capitalist David Sacks wrote on Twitter in the wake of the bank failures. <\/p>\n<\/div>\n

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    With outcry mounting, the White House this week released a statement reaffirming US President Joe Biden’s “trust” in Mr. Powell. <\/p>\n<\/div>\n

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    Mr Sweet said such an unusual move was partly a sign of a more toxic turn in politics. <\/p>\n<\/div>\n

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    “I think on both sides they’re much quicker to criticize and point the finger,” Mr. Sweet said.<\/p>\n<\/div>\n

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    Over the past year, the Fed raised its benchmark interest rate – what it charges banks for loans – from near zero to over 4.5% – the highest level since 2007.<\/p>\n<\/div>\n

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    But strong hiring has helped the economy hold up better than many expected, despite a sharp slowdown in the housing market and struggles in the tech sector, where low borrowing costs had boosted growth.<\/p>\n<\/div>\n

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    Still, the recent banking panic is likely to push the US economy into recession sooner than expected – and there’s little doubt the pressure on Mr Powell has increased, Mr Sweet said. <\/p>\n<\/div>\n

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    “Any time the banking system gets stressed, all eyes turn to the Federal Reserve.”<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

    The world economy is facing a series of problems – and all eyes are pointing in one direction: America. Two US bank failures this month have raised concerns about the health of the financial system. The slumps follow a sharp rise in global borrowing costs, led by the US, that has rattled the global economy […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[45],"tags":[],"class_list":["post-88097","post","type-post","status-publish","format-standard","hentry","category-business"],"yoast_head":"\nThe US interest rate decision the world is watching - Tahrir News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/tahrir2day.com\/news\/2023\/03\/21\/the-us-interest-rate-decision-the-world-is-watching\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The US interest rate decision the world is watching\" \/>\n<meta property=\"og:description\" content=\"The world economy is facing a series of problems – and all eyes are pointing in one direction: America. 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