Tesla CEO Elon Musk criticized the Those of the Federal Reserve rate hike, say it will exacerbate the flight of depositors, which is a major headache for policymakers and the banking industry as the crisis continues.
“A major reason depositors are fleeing is people moving money from low-yielding savings accounts to high-yielding money market (Treasury Bill) accounts. This stupid rate hike will make depositor flight worse,” Musk tweeted.
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Musk responded to this Dogecoins DOGE/USD co-creator Bill Markus‘ sarcastic comment about the Federal Reserve: ‘There’s literally only one bank and it has infinite money, so it’s all cool.’
Major Wall Street indexes ended down over 1.6% on Wednesday federal reserve signaled it could soon pause future rate hikes given the recent crisis, but Char Jerome Powell affirmed his Commitment to bring inflation down to 2%.
The Fed is expected to raise interest rates by 25 basis points. The SPDR S&P 500 ETF Trust SPY closed 1.7% lower and the Invesco QQQ Trust Series 1 QQQ lost 1.36%.
A rise in interest rates almost always leads to a rise in Treasury yields. Two-year government bonds, which are very sensitive to central bank monetary policy moves, are currently yielding 3.96%, despite falling on Wednesday after the central bank’s interest rate decision.
If investors get a higher return on these instruments, which are much safer than putting money in the bank in the current environment, depositors will definitely consider moving away from the banking system.
In the face of the Minister of Finance, this is of greater importance Janet Yellen said Wednesday that the FDIC is not considering pProviding “flat rate insurance” for bank deposits.
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