10 Tweets That Suggest Fed Could Tweak Its Balance Sheet Policy Between Today and May
22 March, 2023
After the recent volatility in bank headlines, attention is shifting to Fed rate decision later today. Softer inflation data and broad uncertainty related to banking sector are settling market consensus around expectations for a 25bp hike. However, investors will mainly focus on whether the Fed’s balance-sheet policy receives any tweaking in light of recent developments (deteriorating liquidity, tightening of financial conditions, deposit outfllows, recession signals, etc.). In this context, several participants are looking for a change between today or next meeting (May).
And just like that, Bloomberg's Financial Conditions Index went from loose (green) to the tightest since Mar 2020. Gives the Fed an excuse to pause if it wants to… pic.twitter.com/HW6DR9XCPe
APOLLO: “Quantifying the impact of tighter financial conditions plus tighter lending standards, we estimate that the events this past week correspond to a 1.5% increase in the Fed funds rate.” [Slok] pic.twitter.com/ra3WtjFch6
🇺🇸 *US FEB. LEADING INDICATOR FALLS 0.3% M/M; EST. -0.3% (11th straight contraction) – BBG *On a YoY basis, the index fell 6.5% (largest decline since June 2020) *Usually, this level is associated with #recession in the coming months. pic.twitter.com/vx9PkRW7iG
