US central bankers must address rising inflation without causing further troubles in the financial sector in the wake of the collapse of Silicon Valley Bank. Despite Federal Reserve boss Jerome Powell signalling a willingness to hasten interest rate hikes, most analysts and traders expect a 25bps increase, matching last February’s move. Early treasury bond losses from a quick reversal from near-zero rates forced Silicon Valley Bank to fail in March. Fears over contagion prompted a losing streak in some mid-sized lenders this month. A 50bps hike is “off the table” given current turbulence, said Citigroup’s global chief economist Nathan Sheets. Wall Street moved in to rescue New York’s Signature Bank, but many regional lenders’ shares once again tumbled last week despite regulatory intervention.
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