March 22, 2023
United States:
Fed Caught Between Inflation and Bank Crisis
All eyes in the financial and economic world will be laser-focused Wednesday on the Federal Reserve as Chair Jerome Powell tries to balance his fight against inflation against a sudden banking crisis.
Powell and his colleagues began their meeting Tuesday with the outcome unusually unclear. While most economists expect a quarter-point interest-rate hike, some say policymakers should pause to shore up financial stability.
Europe:
Lagarde Vows ‘Robust’ Policy With ECB Ready to Act as Needed
The European Central Bank will take a “robust” approach that allows it to respond to inflation risks as needed but also aid financial markets if threats emerge, according to President Christine Lagarde.
“Bringing inflation back to 2% over the medium term is non-negotiable,” she told a conference of ECB watchers in Frankfurt on Wednesday. “We will do so by following a robust strategy that is data-dependent and embeds a readiness to act, but that does not entertain trade-offs around our primary objective.”
Asia:
Hong Kong Regulator Reassures Creditors on Resolution Hierarchy
The Hong Kong Monetary Authority reassured investors that subordinated debt holders have priority over shareholders when banks are being wound up, in a response to media inquiries regarding creditor hierarchy in the Asian financial hub.
Under the Financial Institutions (Resolution) Ordinance, there is a clear order in which shareholders and creditors would bear losses, HKMA said in a statement Wednesday. That means shareholders are the first ones to absorb losses, followed by holders of capital instruments including additional tier 1 and tier 2 capital, the statement added.
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