Big interest rate hikes could cause more market turmoil, while doing too little could have the same effect.
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Lenders face a lot of risks, but two of them – interest rate and liquidity – were the main drivers of the sudden and rapid failure of Silicon Valley Bank and Signature Bank. That’s why more trouble may be ahead for the banking sector.
Normally investors view the future as more uncertain than the present. When that turns on its head, it’s often a bad omen.
