Goldman Sachs no longer expects the Fed to hike rates in March, cites stress on banking system

Reuters/Scott Murdoch and Carolina Mandl/3-13-2023

“U.S. regulators may have stemmed a banking crisis by guaranteeing deposits of collapsed Silicon Valley Bank (SVB), but some experts warn that the move has encouraged bad investor behaviour.”

USAGOLD note: There was already considerable moral hazard built into banking philosophy. Sunday’s rescue package – especially the Fed’s taking in the banks’ underwater bond positions at par instead of market – will solidify it for a long time to come.