![]() ![]() Goldman Sachs analysts projected the Fed could lift its benchmark rate even higher, to a range of 4.75 to 5 by March 2023. The ratings cut comes two days after the Federal Reserve, Treasury, and FDIC announced that all depositors of SVB and Signature Bank would be made whole, and that they would create a new backstop mechanism, The Bank Term Funding Program, to help deposit-taking banks to meet their funding needs and keep customer money secure. USD forecast 2023 The Fed expects rates to peak at 4.5 to 4.75 in 2023, according to the US central bank’s own projections. "This has given rise to asset-liability management challenges, with some banks having invested excess deposits in longer-dated fixed-income securities that have lost value during the rapid rise in US interest rates." "Pandemic-related fiscal stimulus along with more than a decade of ultralow interest rates and quantitative easing resulted in significant excess deposit creation in the US banking sector," the note reads. The rating agency changed its outlook on the sector to negative from stable, noting that "operating conditions have sharply deteriorated." Moody's downgraded its outlook for the US banking system on Tuesday, citing the rapid deterioration of the landscape thanks to bank runs and subsequent collapse of Silicon Valley Bank, Signature Bank, and Silvergate Bank.
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