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Arthur Hayes, Founder of BitMEX: The Faster the Fed Raises Rates, the Faster It Cuts

The faster Powell raises rates, the faster he has to cut them. I will be buying dips when the price of Bitcoin drops. Thank you Powell for more admissions. BTC will reach $1 million.

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Real Vision founder Raoul Pal: Fed will make emergency rate cut if banking crisis intensifies quickly

If the Fed raises the federal funds rate to 5% and adopts a tightening bias, it could weaken banks. Weaker banks could experience financial difficulties, which could lead to a loss of confidence in the banking system and trigger a run on deposits. In that case, U.S. Treasury Secretary Janet Yellen could step in to guarantee deposits. Yellen's deposit guarantee may not work in this scenario, as short-term interest rates rise too quickly and the yield curve inverts. If depositors expect interest rates to rise, they may take their money out of the bank and invest it in higher-yielding assets. This could lead to a liquidity crisis for the banks, voiding Yellen's guarantee.

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Pershing Square CEO Bill Ackman: 5% interest rate will lead to accelerated outflow of bank deposits

Consider the impact of recent events on the long-term cost of equity capital in non-systemically important banks, where you could wake up one day as a shareholder or bondholder and your investment is immediately zero. Add that to the rising cost of debt and deposits due to rising interest rates, and consider what that will do to lending rates and our economy.

The longer this banking crisis drags on, the more damage it will do to smaller banks and their ability to access low-cost capital. Trust and confidence are earned over the years, but can be lost in days. I'm worried we're going to another train wreck (leading to another bad outcome). Hopefully our regulators will do the right thing.

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Citigroup CEO Fraser: The Fed's responsibility is to fight inflation, raising interest rates in line with expectations

The Fed's first responsibility is to fight inflation, and raising interest rates is in line with Citigroup's expectations. Only a small fraction of the population is negatively affected by the Fed's rate hikes.

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"Fed megaphone" Nick Timiraos: Fed abandons eight-month-long "continued rate hikes will be appropriate" language

The Fed raised interest rates again by 25 basis points, raising the benchmark federal funds rate to between 4.75% and 5%, the highest level since September 2007.

Fed officials signaled in their post-meeting policy statement that they may stop raising rates soon. “The Committee anticipates that some additional policy tightening may be appropriate,” the statement said. Fed officials dropped language used in the previous eight statements that the Committee expected “continued rate increases” would be appropriate.

The turmoil caused by the banking crisis has provided the strongest evidence yet that rate hikes have spillover effects on the wider economy. The turmoil is a potent reminder of the dangers facing Fed officials, regulators, members of Congress and the White House in trying to rein in inflation that soared to 40-year highs last year.

U.S. policymakers have cushioned the economic blow from the COVID-19 pandemic in 2020 and 2021 by providing massive financial aid and cheap money. Congress and the White House have largely delegated the task of containing price pressures to the Fed.

The federal funds rate affects other borrowing costs across the economy, including mortgage, credit card and auto loan rates. The Fed has been raising interest rates to cool inflation by slowing economic growth. The Fed argues that these policy moves affect markets by tightening financial conditions, such as raising borrowing costs or lowering the prices of stocks and other assets.

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CICC: The end of the Fed's interest rate hike is approaching

The monetary policy statement suggested that interest rate hikes are nearing the end, and the recent turmoil in the banking industry has reduced the need for further interest rate hikes in the future. However, due to the resilience of inflation, interest rate cuts will not come soon, and the Fed's guidance for interest rates to stay at a high level (high for longer) is still there. Compared with the "calmness" of the Fed, the market does not recognize it. Investors believe that the Fed has underestimated the potential impact of the current round of banking turmoil, and thus has included more interest rate cut expectations. We believe that the turmoil in the banking industry is a demand shock, which will have a restraining effect on economic growth and inflation. However, considering that the United States still faces many supply constraints, this will reduce the impact of demand shocks on inflation. The final result is more likely to be a "stagflation" pattern.

The end of the Fed’s interest rate hike is approaching (Powell has repeatedly emphasized that the current bank problems will cause credit crunch, which will also have a restraining effect on growth and inflation), but the path of interest rate cuts is still very variable, depending on the next inflation and the current financial system The deduction of risks, too many interest rate cut expectations actually originally implied that the banking system may still face risks in the future, which means that unless the systemic risks are further escalated, the 10-year US bond interest rate will further decline at the current position. Space is also relatively limited.