Do you still remember?
Two weeks ago, Federal Reserve (Fed) Chairman Jerome Powell warned that the central bank may have to raise interest rates higher and faster than expected.
As a result, markets expect the Fed to hike rates by 50 basis points at its policy meeting this month.
Even so, in just a few days, the expectations changed drastically!
It's all about the failure of Silicon Valley Bank (SVB) and Signature Bank of the United States which has sparked new concerns about banking and the world economy.
This is because the banks are no longer able to bear the burden of the Fed's aggressive actions in raising interest rates.
As a result, investors are again placing expectations for a smaller increase in Fed interest rates, or perhaps keeping them unchanged.
Keeping interest rates unchanged may be difficult for the central bank given that inflation in the US is still high, currently at 6%.
So what options does the Fed have?
The strongest probability for now is a rate hike of 25 basis points.
What will happen if the Fed keeps raising rates by 50 basis points?
This will likely lead to further collapse in the US and global banking sector, or worse affect the economy as a whole.
However, investors still need to be wary of any surprises the Fed may make.
So, what are your expectations for the Fed's decision later?
