Factbox-SVB collapse may prompt Fed to go slow on rate hikes

Reuters

Published Mar 13, 2023 07:23AM ET

Updated Mar 14, 2023 01:50AM ET

(Reuters) -Traders no longer expect a rate hike of 50 basis points by the U.S. Federal Reserve next week as the surprise collapse of lender Silicon Valley Bank rattles the financial system.

The current projection is for a 25 bps move, with some expecting no hike at all or even a cut.

That is a quick reversal in expectations after hawkish commentary from Fed Chair Jerome Powell had prompted traders to see a 70% chance of a 50 bps rate hike just a week earlier.

Following are rate expectations from major Wall Street banks:

Bank Current expectation Expectation before SVB

crisis

March hike Terminal March Terminal rate

(in bps) rate hike

(in

bps)

Goldman No hike 5.25% - 5.5% 25 5.5% - 5.75%

JPM 25 5% - 5.25% 25 5% - 5.25%

Citi 50 5.5% - 5.75% 50 5.5% - 5.75%

BofA 25 5.25% - 5.5% 25 5.25% - 5.5%

Morgan 25 5.12% 25 5.125%

Stanley

Barclays (LON:BARC) No hike 5.1% 50 5.25% - 5.5%