The Washington PostDemocracy Dies in Darkness

Opinion The Federal Reserve should not raise interest rates on March 22

Federal Reserve Chair Jerome H. Powell testifies on Capitol Hill in Washington on March 7. (Kevin Lamarque/Reuters)
3 min

The United States has a stubborn inflation problem. Food, rent and transportation costs remain high, and many parts of the service economy aren’t cooling off. It’s worrisome. But there’s a larger concern right now: the stability of the financial system. The rapid downfalls of Silicon Valley Bank and Signature Bank have zapped confidence in critical parts of the banking sector and triggered concerns about what is next to rupture. The Federal Reserve should temporarily pause interest rate hikes on Wednesday to give the financial system time to adjust to the new reality.

Bank failures are scary. This is not a repeat of the 2008-2009 financial crisis. But people are shaken. Many are moving money out of small and midsize banks and into larger ones. It’s getting harder to get a loan as banks have little appetite for additional risk. Regional banks remain under pressure. First Republic Bank needed a $30 billion cash infusion. Overall, banks have borrowed $308 billion from the Fed, up from $5 billion a week ago. A crisis abroad at Credit Suisse only adds more jitters. As the Wall Street saying goes, “When the Fed tightens, something breaks.” The nation needs certainty that nothing else is at a breaking point.

The Post's View: No one should be happy about these bank ‘bailouts’

This doesn’t mean rate hikes are over. In fact, the Fed should signal in its forecasts and in Chair Jerome H. Powell’s Wednesday news conference that more rate increases are coming, including at the next meeting on May 3. Investors still expect more hikes. But the Fed’s ultimate job is risk management, and right now the bigger risk is further harming financial stability.

Almost 190 banks are at risk of a similar Silicon Valley Bank-style crisis if customers attempt to withdraw deposits, several academics warn in new research. These institutions are sitting on too many government bonds that are worth less after the rapid rise in interest rates. In other words, many banks don’t have enough money to cover a small-scale bank run.

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Inflation remains stubbornly high at 6.4 percent in January. The Federal Reserve’s job is not done in this fight. More interest rate hikes are needed. Read a recent editorial about inflation and the Fed.
Afghanistan’s rulers had promised that barring women from universities was only temporary. But private universities got a letter on Jan. 28 warning them that women are prohibited from taking university entrance examinations. Afghanistan has 140 private universities across 24 provinces, with around 200,000 students. Out of those, some 60,000 to 70,000 are women, the AP reports. Read a recent editorial on women’s rights in Afghanistan.
A new study finds that half the world’s mountain glaciers and ice caps will melt even if global warming is restrained to 1.5 degrees Celsius — which it won’t be. This would feed sea-level rise and imperil water sources for hundreds of millions. Read a recent editorial on how to cope with rising seas, and another on the policies needed to fight climate change.


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While inflation remains well above the Fed’s 2 percent goal and the job market is still strong, that data is a snapshot of reality as of February. There has been a dramatic shift in just over a week. The banking stress is likely to cause the tech sector to pull back even more. Regional banks are a big driver of commercial real estate. Construction job openings were already falling fast in January, and this crisis could accelerate the retreat. The full extent of the fallout in numerous industries isn’t yet clear.

The Fed has developed a reputation for being “data dependent." Now is the moment for Mr. Powell to wait for clearer data and to use his microphone to assure an anxious nation that banks are safe and the Fed has fixed any troubling supervisory lapses.

The Post’s View | About the Editorial Board

Editorials represent the views of The Post as an institution, as determined through debate among members of the Editorial Board, based in the Opinions section and separate from the newsroom.

Members of the Editorial Board and areas of focus: Opinion Editor David Shipley; Deputy Opinion Editor Karen Tumulty; Associate Opinion Editor Stephen Stromberg (national politics and policy, legal affairs, energy, the environment, health care); Lee Hockstader (European affairs, based in Paris); David E. Hoffman (global public health); James Hohmann (domestic policy and electoral politics, including the White House, Congress and governors); Charles Lane (foreign affairs, national security, international economics); Heather Long (economics); Associate Editor Ruth Marcus; and Molly Roberts (technology and society).