The Fed announced its monetary policy decisions yesterday after the collapse of 3 banks in the country and the process in which the expectations in the markets were turned upside down.
The Bank increased the policy rate by 25 basis points, in line with expectations, to the range of 4.75-5 percent, the highest level in 16 years.
The US banking system is "solid and resilient", the Fed said in a statement, adding that recent developments are likely to result in tighter credit conditions for households and businesses and put pressure on economic activity, hiring and inflation.
Announcing its forecasts for the economy, the Fed did not change its forecasts for the federal funds rate for this year. While leaving its forecast for the federal funds rate at 5.1 percent for the end of this year, the bank increased it to 4.3 percent from 4.1 percent for 2024.
Answering questions after the meeting, Powell said, "Members do not have such a foresight."
Underlining that the bank will continue to fight inflation, Powell said that while evaluating the need for more interest rate hikes, they will focus on the incoming data, the changing outlook and especially the unexpected effects of the credit tightening.
As for pricing in money markets, it is estimated that the Fed will cut interest rates with an 80% probability at its June meeting this year.
On the other hand, the statements made by the US Treasury Secretary Janet Yellen in the US Senate also led to the strengthening of the sales in the stock markets.
Yellen, in the session she attended in the Senate on the 2024 fiscal year budget, stated that they did not work on insuring all bank deposits.
Shares of regional banks fell after Yellen's statements, while the shares of First Republic Bank, one of the banks mentioned in the banking crisis in the USA, lost more than 15 percent.
Yesterday, the S&P 500 index fell by 1.65 percent, the Dow Jones index by 1.63% and the Nasdaq index by 1.60 percent in the New York stock market. Index futures contracts in the USA started the new day with an increase.
While the positive course continues to be effective in European stock markets as the banking crisis subsides for now, European Central Bank (ECB) President Christine Lagarde, who made a statement yesterday, stated that they are determined to ensure price stability.
Stating that inflation pressures remain strong, Lagarde said that the ECB will continue to make data-driven decisions.
While all eyes are on the monetary policy decisions of the TCMB today, most of the economists participating in the market's expectations survey expect the bank to keep the policy rate constant.