The Federal Reserve will most likely raise interest rates by 25 basis points in March as it tries to balance controlling inflation without exacerbating stresses in the banking sector, according to Franklin Templeton’s chief executive officer.
(Bloomberg) — The Federal Reserve will most likely raise interest rates by 25 basis points in March as it tries to balance controlling inflation without exacerbating stresses in the banking sector, according to Franklin Templeton’s chief executive officer.
“The Fed is threading a needle here,” said Jenny Johnson, CEO of the global money manager that oversaw $1.4 trillion at the end of February.
On one hand, large rate increases will cause more paper losses for banks, Johnson said in an interview with Bloomberg Television’s Yvonne Man and David Ingles. On the other, consumer spending remains strong, stoking inflation. “So I don’t think we are out of the woods yet on that.”
The central bank is likely to follow a March increase with at least another 25 basis-point hike, Johnson said. Most economists narrowly expect the Fed to raise rates by a quarter point at its March 21-22 meeting and at its next two gatherings to the 5.25% to 5.5% range, according to a Bloomberg News survey.
Johnson said “selective” financial companies are still investable, even after Silicon Valley Bank and Signature Bank collapsed and Credit Suisse Group AG had to open a Swiss central bank credit line to calm investors. “Any time an entire sector goes down, you can find opportunities.”
–With assistance from David Ingles, Yvonne Man, Adrian Wong and Huiao Cui.
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