FT News Briefing The Fed’s SVB balancing act
Mar 15, 2023
Private equity firms are eyeing loan purchases from Silicon Valley Bank as the Federal Reserve grapples with rising inflation and potential financial instability. Questions arise about regulatory oversights related to SVB's collapse. Meanwhile, the US, UK, and Australia unveil plans for a long-term submarine partnership that may boost jobs and industry. The implications of recent economic indicators and regulatory rollbacks further complicate the Fed's strategies, underscoring a tightrope walk between inflation control and bank stability.
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Fed's Dilemma
- The Federal Reserve faces a dilemma due to high inflation and banking instability.
- The SVB collapse may cause them to raise interest rates more cautiously.
Inflation Remains High
- The February CPI shows inflation at 6%, but the critical figure is the monthly core increase.
- This jump indicates underlying inflationary pressures are not easing sufficiently.
Fed's Caution
- The Fed is cautious about raising rates aggressively due to financial instability.
- They don't want to exacerbate uncertainty in fragile markets.