The financial market is experiencing one of its biggest crises since 2008, with five banks collapsing in just two weeks. Fed Chairman Jerome Powell, whose responsibility is to catch prices, stabilize employment, and maintain financial stability, is now one of the busiest people in the world.
Chairman Powell has two options to address the crisis. Some on Wall Street are calling for interest rate freezes or cuts, but such moves could create further anxiety in the market. Instead, a 25 basis point increase seems to be the best option.
However, Chairman Powell will face tough questions from reporters at the press conference, who will undoubtedly ask about the banking crisis. How he responds will be closely watched by the market.
If he takes a “pigeonish” approach and reassures the market that the Fed will solve the problem, the market is likely to rally in relief. But if he takes a more hawkish stance, the market may tilt its head and become uncertain about the long-term effects of money printing.
Whatever Chairman Powell decides on March 22 at 2 pm (ET), there will be huge money movements in the market. Bitcoin, which was created as a currency that could not be swayed by anyone’s words, may be particularly affected.
Governor Lee Chang-yong of the Bank of Korea has already expressed his concerns about virtual assets, stating that they are causing him trouble. The collapse of the five banks is a reminder that financial stability is a fragile thing, and the decisions made by central bankers can have far-reaching consequences.
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This article was republished from azcoinnews.com
