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Bwlow US based Hedge fund, investing in alternative assets and P2P lending By Suman Bannerjee, CIO, Hedonova

The 25 basis point hike is welcome, even on the backdrop of the US banking crisis. Reading the FOMC statement it is clear that the Fed is laser focused on taming inflation. This is a great approach since high inflation can affect an export oriented economy like the US in multiple ways, such as weakening of the dollar, reduction of exports or increase in balance of payments.

Will there be another rate hike? Hard to say. The meeting did not include a notation that “some additional policy firming may be appropriate,” which was included in its prior release. That omission leaves open the possibility for an upcoming pause in rate hikes. The banking crisis will mostly be mitigated by the Treasury instead of the Fed. The Treasury will mostly purchase long dated bonds from banks or provide financing against them.

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