WSJ Fedwatcher Nick Timiraos highlights how close the Fed was to leaving rates unchanged at the most-recent meeting
- Bid decisions are usually happen in the week leading up to the FOMC decision, not during the two-day meeting
- Banking system crisis dominated run-up to the March 21-22 meeting and the decision to hike 25 bps was made on March 20 after the SNB actions
- New tools rolled out to address heightened financial stress
- Fed pushed ahead with rate increase to fight inflation
- March decision: raise rates by a quarter point or hold steady
- Swiss authorities' intervention in global banking system influenced decision
- Fed raised rates by quarter point to avoid losing ground to inflation
- Banking turmoil created risks of rapid tightening in financial conditions
- “We could have gone either way here. A lot depended on how the UBS-Credit Suisse situation worked out,” said the Fed's Bullard
On net, this points to the Fed doing less in the future or topping out now but it depends on how Fed officials see credit conditions evolving.
