A leading fund manager warns that regional banks could cause 'financial Armageddon' — unless the government makes 2 crucial moves immediately
), is convinced that the Fed's aggressive, rapid interest rate hikes have put undue stress on banks.
Alarmingly, the Fed has now hiked rates much faster than before the financial crisis. In only 8 FOMC meetings between March 2022 and today, the Federal Funds Rate has risen from nearly zero to 4.5% as the Fed tries to control the rampant inflation that it once ignored, Hatfield noted.worsen the sector's ongoing crisis of confidence"They were warned they were going to break something, but we didn't know what it is," Hatfield said."Well now we know what it is.
What frustrates Hatfield and Rosenberg most is that higher interest rates might not even be needed. Plummeting oil prices suggest that inflation has evolved into deflation, Hatfield said, though he has no confidence in the Fed to correctly react to real-time data. Rosenberg concurred:"I have trouble with central bankers who spend most of their time chasing lagging and contemporaneous indicators, but that's what we have on our hands today, unfortunately."Barring some seismic shifts in government policy, Hatfield said that the US could be heading for"financial Armageddon.
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