Fed between inflation and banking crisis

The text provides a detailed overview of the current focus on the Federal Reserve and Chairman Jerome Powell, especially in light of the ongoing banking crisis. Here’s the proofread version:

The financial world is intently focusing on the Federal Reserve and Chairman Jerome Powell, particularly his upcoming address following the new session of the US central bank amidst a sudden banking crisis.

Powell and his team began their regular monthly meeting on Tuesday, facing an unusually uncertain outcome. Most economists anticipate the central bank of the world’s largest economy to increase interest rates by 0.25 per cent. However, some argue that policymakers should consider pausing to bolster financial stability.

“This tension leads to existential dread,” said Derek Tang, an economist at LH Meyer/Monetary Policy Analytics in Washington, in an interview with Bloomberg. “Did they go too far or not far enough? It could be both at the same time.”

Updating the Growth Rate

Another critical aspect of this week’s meeting is the expectation that US monetary policymakers will issue updated growth rate forecasts for the first time since December. These updates will provide crucial insights into whether further rate hikes for this year.

The decision and forecasts are scheduled to be announced at 20:00 CET, with Powell set to speak at a press conference 30 minutes later.

As of Tuesday afternoon, equity market participants polled indicated an 80 per cent probability that the Fed would raise rates by 0.25 per cent. This increase would set key interest rates in a range of 4.75 per cent to 5.0 per cent, the highest since 2007, just before the global economic crisis.

Following UBS’s acquisition of Credit Suisse with Swiss state guarantees on Sunday, German central bank Governor Joachim Nagel noted the possibility of banks becoming “more cautious” in lending due to market uncertainty. However, he also mentioned that it is too early to assert that the EU is on the brink of a credit crisis that could dampen demand.