News - Banks or Inflation

The US banks look shaky with First Republic taking the lead.

So why did the FED raise rates +0,25% yesterday?

To bring down inflation to their 2% goal and secure the economy and it’s “price stability” as they call it.

That’s their main objective.

Sure they can’t risk a bank crisis, but the FED say they now have it under control and will “use all of our tools” to keep it safe.

I’m not too worried about them keeping it safe.

I’m worried about the inflation staying high.

This week the inflation in the UK went UP from 10,1% to 10,4% in what seemed to surprise the market.

Today we will see if they will cut or raise their rates

What does it all mean?

It means that we’re at a flexing point where the Central Banks needs to carefully choose between raising interest rates to bring down inflation, or pause or lower them to ease the environment for the banks and lenders.

It’s a balance act now.

Balancing Martin,

Out.