SVB's dramatic implosion this month was the largest banking failure since the 2008 financial crisis.
Powell told senators earlier this month that it may be necessary to increase the benchmark lending rate to tame the"widespread" inflationary pressures keeping price rises elevated above the bank's long-run target of 2 per cent.But the financial stress brought to light by SVB's failure caused a dramatic turnaround in expectations.
"We think recent events have changed the debate," he wrote in a note to clients."We think the debate is now between a 25 rate hike in March, or none at all."Data for February shows that some corners of the American economy are now beginning to contract – which eases pressure on the Fed – while the consumer price index measure of inflation slowed slightly to an annual rate of 6 per cent.
But the Fed's favoured measure of inflation showed an annual increase in January, suggesting there is still a long way to go before price rises are brought back under control.
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