- The Fed meeting this week will be the first since a flurry of bank failures threw markets into chaos.
- Market heavyweights such as Jeff Gundlach and Steve Eisman have been discussing what they see is next for rates.
To raise or not to raise interest rates: that's the question facing the Federal Reserve at its policy meeting this coming week, the first since three US banks failed and sparked fears about a brewing financial crisis.
Market views on what's next for the benchmark fed funds rate have been whipped around recently. The Fed earlier this month appeared set to deliver a rate hike of 25 or 50 basis points, its ninth consecutive increase, as it deals with inflation sitting well above its 2% target.
Traders then began pricing in a possible pause for March after the $4 fanned fears about a broader crisis in the banking sector.
Heading into Wednesday's decision, $4 in the fed funds rate, to a range of 4.75%-5%.
Here's a look at what some top commentators and analysts foresee for the Fed's next move.
David Rubenstein, co-chairman of private equity firm Carlyle Group:
A quarter-percentage point hike is the most likely decision for March, $4.
A pause would make people think the Fed has lost interest in fighting inflation. On the other hand, an increase of 50 basis-points is too much for some banks to handle at this point.
"So I suspect 25 basis points is the split-the-baby decision that's most likely," Rubenstein told Bloomberg.
'Big Short' investor Steve Eisman>$4:
"Fifty basis points is off the table," Eisman told $4. "So either they're going to do 25 basis points or they're going to do nothing."
Investors should start worry if the regional banking crisis prompts a pause in rate hikes. "If the Fed doesn't raise rates … maybe it'll be positive for a couple hours or a couple of weeks," he said. "But the Fed won't be raising rates because it's scared."
DoubleLine Capital's Jeffrey Gundlach:
"I just think that, at this point, the Fed is not going to go 50. I would say 25," $4. "For credibility's sake, they'll probably raise rates 25 basis points. I would think that that would be the last increase."
Economist Mohamed El-Erian:
SVB's meltdown will force policymakers to give up its aggressive monetary policy, $4.
Allianz's chief economic adviser pointed to plunging US bond yields as a key sign the Fed will eventually halt rate increases.
"With the US $4-related bailout going beyond what many expected, markets see it as more than protecting deposits and small $4" El-Erian said in a $4.
Goldman Sachs:
The investment bank $4.
"In light of recent stress in the banking system, we no longer expect the FOMC to deliver a rate hike at its March 22 meeting with considerable uncertainty about the path beyond March," Goldman Sachs analysts wrote.
Goldman is still expecting increases of 0.25% at the May, June and July meetings, leaving the terminal rate at 5.25% to 5.5%. Still, there's "considerable uncertainly about the path."