Pacific Investment Management Co (PIMCO) CEO Daniel Ivascyn expects the federal reserve to raise interest rates by 25 basis points during its next policy meeting on March 22. Ivascyn expects the central bank to ease its interest rate hikes amid concerns of financial instability within the banking sector.
While the European Central Bank imposed a 50 basis point hike on Thursday, the expectation is for its American counterpart to not follow in this direction, instead opting for a 25 basis point rise. A temporary pause in interest rate hikes is not expected.
“They’re going to be watching signs of more instability across the financial sector very carefully,” Ivascyn stated. “There certainly are scenarios where they pause, it’ll likely be a hawkish pause if it’s a pause, but our current thinking is they go 25.”
PIMCO expects volatility in the banking sector to persist over the coming month with some “isolated areas of weakness, however, he assured that the market is well-capitalized compared to that during the 2008 financial crisis.
Following the collapse of Silicon Valley Bank last Friday, Credit Suisse on Thursday sought to stabilize itself financially by borrowing up to $54 billion from Switzerland’s central bank.