• Latest
  • Trending
Presently placid, the Fed is readying another shock

Presently placid, the Fed is readying another shock

Fed’s stress test on bank health results roll out on Thursday

Surprise Fed Announcement Spurs Record Treasury Yield Surge

Ericsson and Deutsche Telekom Partner to Harness Network APIs for Telecom Revenue Growth

Ericsson and Deutsche Telekom Partner to Harness Network APIs for Telecom Revenue Growth

National World’s Pursuit of Telegraph Group: Shaping the Future of British Media

National World’s Pursuit of Telegraph Group: Shaping the Future of British Media

HSBC’s Mexico Unit analysing possible Citibanamex purchase

HSBC’s Strategic Vision for Global Growth Amid Shifting Economic Dynamics

Emerging FX Trading Engine opened by Deutsche Bank in Singapore

Deutsche Bank Partners with Taurus to Offer Custody Services for Institutional Clients’ Digital Assets

Investors caught off guard as Bank of Canada’s inflation indicator fails

Canadian Home Sales Dip Following Bank of Canada’s Interest Rate Hike

After China central bank vows to crack crypto trade, Bitcoin slips

Global Regulators and IMF Unite to Tackle Crypto Risks

Rothschild & Co Set to Delist from Paris Market as Majority Owners Secure 96% Control

Rothschild & Co Set to Delist from Paris Market as Majority Owners Secure 96% Control

Arm Considers Higher Valuation as IPO Demand Surges

Arm Considers Higher Valuation as IPO Demand Surges

South Korea Should Maintain Current Monetary and Fiscal Policies, IMF Says

South Korea Should Maintain Current Monetary and Fiscal Policies, IMF Says

Mastercard and Visa Deny Reports of Credit Card Fee Increases

Mastercard and Visa Deny Reports of Credit Card Fee Increases

Northern Trust Appoints Aisling Keane as Head of Asset Servicing in Hong Kong

Northern Trust Appoints Aisling Keane as Head of Asset Servicing in Hong Kong

Global Business Review Magazine
Wednesday, October 4, 2023
Nominate Here
  • Home
  • Banking
  • Finance
  • Technology
  • FinTech
  • Business
  • Videos
  • Events
  • Awards
  • Magazine
No Result
View All Result
Global Business Review Magazine
No Result
View All Result

Presently placid, the Fed is readying another shock

Presently placid, the Fed is readying another shock

Neel Kashkari, who successfully steered through the financial crisis of 2008, is now deeply concerned about the risks posed by inflation as a U.S. monetary policymaker.

In an interview last week, as the president of the Federal Reserve Bank of Minneapolis, Kashkari expressed a preference for being more aggressive in curbing inflation.

YOU MAY ALSO LIKE

Surprise Fed Announcement Spurs Record Treasury Yield Surge

Rothschild & Co Set to Delist from Paris Market as Majority Owners Secure 96% Control

The persistence of inflation despite a rapid rate hike cycle since the 1980s has surprised Kashkari and other Federal Reserve officials.

As a result, they have adopted a hawkish stance on interest rates in recent days.

However, this approach may unintentionally set the stage for the next market crisis and undermine the effectiveness of the Fed’s policy tightening measures aimed at combating inflation.

The Fed’s goal is to guide the economy toward a “soft landing” while ensuring financial stability. However, this strategy is increasing the likelihood of either a crash landing or a more prolonged and turbulent descent.

Raghuram Rajan, the former governor of the Reserve Bank of India and a finance professor, remarked that the Fed is caught in a difficult situation where they face challenges regardless of their actions.

If they raise short-term policy rates, it could eventually lead to further disruptions.

The probability of achieving a soft landing, according to Rajan, is minimal. The Federal Reserve had turned down a comment on the case.

Over the past year, the sharp rise in interest rates, following more than a decade of cheap money, has exposed risky investments and flawed business models.

Stress has emerged in various parts of the global financial system, from the bursting of the cryptocurrency bubble to turmoil in the U.S. regional banking sector.

While the exact source of the next market upheaval remains uncertain, there are several potential vulnerabilities, including commercial real estate and money market funds.

Although markets have stabilized since the worst of the banking turmoil, concerns about financial stability persist.

Some believe that the regional banking sector is still under stress, and there are multiple risks to financial stability that have not been fully addressed.

Tighter monetary policy could exacerbate these risks or amplify the impact of other shocks, such as debt ceiling negotiations. In such instances, the Fed may need to intervene further to mitigate the consequences, partially offsetting the tightening measures.

Wendy Edelberg, the director of The Hamilton Project at the Brookings Institution, emphasized that the Fed has no intention of conducting monetary policy through financial crises.

If their actions contribute to creating crises, they will need to take steps to alleviate the situation.

The Fed’s emergency support to the banking system in response to the run-on Silicon Valley Bank in March was seen by some as counteracting their tightening moves.

The confusion in the market about whether the Fed is tightening or easing reflects the uncertainty surrounding its current stance.

Systemic shocks could originate from both anticipated and unforeseen sources.

The Federal Reserve, in its most recent financial stability report, drew attention to various aspects that raised concerns, encompassing life insurance, specific bond and loan funds, as well as private markets.

The lack of transparency in private markets makes it difficult to fully comprehend the extent of debt-driven investments and interconnections among financial institutions.

As the Federal Reserve continues to navigate the challenges of managing inflation and maintaining financial stability, they must carefully assess the potential risks and take appropriate measures to mitigate them.

The interconnected nature of the global financial system calls for a delicate balancing act to ensure a sustainable and resilient economy.

Given the still-recovering economy’s state of tumble, any quick or unprecedented moves from the Fed will likely wreak havoc among the markets. They ought to thread carefully this time around.

Tags: Federal Reserve BankfinanceUnited States
ShareTweetShare

Search

No Result
View All Result

Recent News

Fed’s stress test on bank health results roll out on Thursday

Surprise Fed Announcement Spurs Record Treasury Yield Surge

Ericsson and Deutsche Telekom Partner to Harness Network APIs for Telecom Revenue Growth

Ericsson and Deutsche Telekom Partner to Harness Network APIs for Telecom Revenue Growth

National World’s Pursuit of Telegraph Group: Shaping the Future of British Media

National World’s Pursuit of Telegraph Group: Shaping the Future of British Media

HSBC’s Mexico Unit analysing possible Citibanamex purchase

HSBC’s Strategic Vision for Global Growth Amid Shifting Economic Dynamics

Emerging FX Trading Engine opened by Deutsche Bank in Singapore

Deutsche Bank Partners with Taurus to Offer Custody Services for Institutional Clients’ Digital Assets

Investors caught off guard as Bank of Canada’s inflation indicator fails

Canadian Home Sales Dip Following Bank of Canada’s Interest Rate Hike

Global Business Review Magazine

Global Business Review is a online print magazine focusing on the updates and information about on emerging markets, Finance, Banking, Technology. Global Business Review provides news, features, analysis, commentary, and interviews from industry across the globe.

Recent News

  • Surprise Fed Announcement Spurs Record Treasury Yield Surge
  • Ericsson and Deutsche Telekom Partner to Harness Network APIs for Telecom Revenue Growth
  • National World’s Pursuit of Telegraph Group: Shaping the Future of British Media
  • HSBC’s Strategic Vision for Global Growth Amid Shifting Economic Dynamics
  • Deutsche Bank Partners with Taurus to Offer Custody Services for Institutional Clients’ Digital Assets

Categories

  • Banking
  • Business
  • Events
  • Finance
  • FinTech
  • Tech
  • Uncategorized
  • Videos
  • About
  • Nominate
  • Privacy & Policy

Copyright © 2020 - 2023 Global Business Review Magazine - All Rights Reserved.

No Result
View All Result
  • Home
  • Banking
  • Finance
  • Technology
  • FinTech
  • Business
  • Videos
  • Events
  • Awards
  • Magazine

Copyright © 2020 - 2023 Global Business Review Magazine - All Rights Reserved.

Go to mobile version