(Corrects typographical error in the second column header in the table)
(Reuters) - Traders no longer expect a rate hike of 50 basis points by the U.S. Federal Reserve next week as the surprise collapse of startup-focused Silicon Valley Bank has rattled the financial system.
A 25 bps hike seems most likely, although traders see a 30% chance that the Fed will keep the policy rate unchanged in March.
That is a quick reversal in expectations after hawkish commentary from Fed Chair Jerome Powell had prompted traders to give a 70% chance of a 50 bps rate hike just a week earlier.
Following are rate expectations from major Wall Street banks:
Bank Expectation post SVB Expectation before SVB
crisis and U.S. Feb CPI crisis
March hike Terminal March Terminal rate
(in bps) rate hike
(in
bps)
Goldman No hike 5.25% - 5.5% 25 5.5% - 5.75%
JPM 25 5% - 5.25% 25 5% - 5.25%
Citi 25 5.5% - 5.75% 50 5.5% - 5.75%
BofA 25 5.25% - 5.5% 25 5.25% - 5.5%
Morgan 25 5.125% 25 5.125%
Stanley
Barclays (LON:BARC) No hike 5.1% 50 5.5% - 5.75%
NatWest No hike N/A 50 N/A
Nomura 25 bp cut N/A 50 N/A
(This factbox has been refiled to fix a typographical error in the second column header in the table)