Home ›› 24 Mar 2023 ›› Stock
Asian markets mostly rose Thursday and the dollar retreated, brushing off a Wall Street fall on hopes the Federal Reserve’s latest interest rate hike would be one of its last.
The gains came even as the US central bank’s chief Jerome Powell dealt a blow to hopes it could cut borrowing costs later in the year to soothe banking sector fears.
Recent turmoil caused by the collapse of two US lenders and the takeover of Credit Suisse had fanned speculation central banks would pause their inflation-fighting monetary tightening campaign.
But on Wednesday, officials announced a ninth straight increase in the cost of borrowing as they put their emphasis on containing prices, though the 25-basis-point rise was half of what was expected at the start of the month.
Powell also told journalists that “rate cuts are not in our base case” and warned that there needed to be more supervision and regulation of banks to prevent another crisis.
Speculation had been swirling that officials would announce a cut as the collapse of Silicon Valley Bank and Signature Bank has been blamed on the impact of more than a year of rate hikes.
Analysts said the Fed had to walk a thin line as announcing a pause could have fuelled worries there was more to the banking sector’s woes than met the eye.
Powell added that the crisis in the banking sector was likely to bring “tighter credit conditions for households and businesses”.
His comments came as Treasury Secretary Janet Yellen told lawmakers that authorities were not looking at a blanket increase in deposit insurance for banks.
