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OptionsPlay Director of Education and Product Jessica Inskip gives her take on how Fed Chair Powell should respond to high inflation on ‘Making Money.’

The Federal Reserve launched its war against inflation exactly one year ago to the day, kicking off the most aggressive interest rate hike campaign since the 1980s as it rushed to cool the economy. 

In the time since March, 16, 2022, the U.S. central bank has lifted the federal funds rate eight times, underscoring just how serious policymakers are about tackling the inflation crisis. The increases put the key benchmark federal funds rate at a range of 4.75% to 5%, the highest since before the 2008 financial crisis.

The ninth increase is just around the corner, with Chairman Jerome Powell suggesting last week the Fed may need to raise rates higher than previously anticipated and pick up the pace of increases amid signs of broadening inflationary pressures within the economy. 

INFLATION ROSE 0.4% IN FEBRUARY AS PRICES REMAIN STUBBORNLY HIGH

Federal Reserve Chairman Jerome Powell testifies during a Senate Banking, Housing, and Urban Affairs Committee hearing in the Hart Building March 7, 2023. (Tom Williams/CQ-Roll Call, Inc via Getty Images / Getty Images)

The hawkish commentary prompted investors to reevaluate their expectations for the meeting, with many ramping up the odds that the Fed approves a half percentage point hike during its March 21-22 meeting.

But Wall Street no longer sees that as a possibility after the stunning implosion of Silicon Valley Bank on Friday roiled global markets and triggered fears of a broader financial meltdown. 

Silicon Valley Bank collapsed after a liquidity crunch, forcing a government takeover and raising questions over the fate of nearly $175 billion in customer deposits. 

It marked the largest U.S. bank failure since the global financial crisis in 2008, and rising interest rates played a pivotal role in SVB's collapse, according to Treasury Secretary Janet Yellen.

"The problems with the tech sector aren’t at the heart of the problems at this bank," Yellen said Sunday in an interview with CBS’ "Face the Nation."

SVB COLLAPSE THROWS FED RATE-HIKE DECISION NEXT WEEK INTO UNCERTAINTY

That's because SVB, which largely catered to tech companies, venture capital firms and high net worth individuals, saw a huge boom in deposits during the pandemic, with its assets surging from $56 billion in June 2018 to $212 billion in March 2023. The bank responded by investing a large chunk of that cash into long-term U.S. Treasury bonds and other mortgage-backed securities. 

That strategy backfired when the Fed started rapidly raising interest rates and the value of those securities tumbled.  

A sign of a branch of the Silicon Valley Bank in Frankfurt, Germany, Monday, March 13, 2023. (AP Photo/Michael Probst / AP Newsroom)

That coincided with a decline in available funding for startups, which started drawing down more of their money to cover their expenses, forcing the lender to sell part of its bond holds at a steep $1.8 billion loss. When depositors realized that SVB was in a precarious financial situation, a bank run ensued. 

The bank's collapse, coupled with another failure at Signature Bank and turmoil at Swiss lender Credit Suisse, drastically altered rate hike bets on Wall Street.

MORTGAGE RATES POST BIG DECLINE AMID SVB FALLOUT

While problems at the European lender appear to be unrelated to SVB, the back-to-back issues sparked fresh fears over the vulnerability of the banking sector in the era of high interest rates. Swiss regulators stepped in on Wednesday afternoon to announce they would provide liquidity to Credit Suisse if necessary.

Investors remain evenly divided over whether the Fed will pause its rate hike cycle next week or approve a 25 basis point increase, according to data from the CME Group's FedWatch tool, which tracks trading. But they are in wide agreement that policymakers will cut rates later this year amid the bank sector fiasco.

Pricing in futures markets suggests the central bank will trim rates throughout the year, shaving a full percentage point from a peak of 4.75% to 5% by the end of 2023. 

The logo of Swiss bank Credit Suisse at its headquarters in Zurich, Switzerland, March 24, 2021. (Reuters/Arnd Wiegmann / Reuters Photos)

"The easing of recent inflationary pressures, combined with concerns about the banking industry, finally give the Fed reason to discuss a possible end to their tightening cycle at next week’s meeting," said John Lynch, chief investment officer for Comerica Wealth Management. 

Still, new data released Tuesday morning revealed that inflation remains uncomfortably high. The Labor Department said the consumer price index, a broad measure of the price for everyday goods, including gasoline, groceries and rents, rose 0.4% in February from the previous month. Prices climbed 6% on an annual basis. 

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Although it marked the slowest annual inflation rate since September 2021, the gauge remains about three times higher than the pre-pandemic average, underscoring the persistent financial burden placed on millions of U.S. households by high prices. 

"The Federal Reserve is going to have to pick its poison: tolerate some inflation for a bit to see if its current series of rate hikes takes hold and pause or keep hiking and deal with the financial instability caused by their own policy decisions," said Jamie Cox, a managing partner for Harris Financial Group.

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Politics

Farage has ‘grabbed the mic’ to dominate media agenda, says Harman

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Farage has 'grabbed the mic' to dominate media agenda, says Harman

Nigel Farage has successfully exploited the Commons recess to “grab the mic” and “dominate” the agenda, Harriet Harman has said.

Speaking on Sky News’ Electoral Dysfunction podcast, the Labour peer said that the Reform UK leader has been able to “get his voice heard” while government was not in “full swing”.

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Mr Farage used a speech this week to set himself, rather than Kemi Badenoch’s Tories, up as the main opposition to Sir Keir Starmer at the next election.

The prime minister responded on Thursday with a speech attacking the Clacton MP.

Baroness Harman said: “It’s slightly different between opposition and government because in government, the ministers have to be there the whole time.

“They’ve got to be putting legislation through and they kind of hold the mic.

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“They can dominate the news media with the announcements they’re making and with the bills they’re introducing, and it’s quite hard for the opposition to get a hearing whilst the government is in full swing.

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‘Big cuts’ to fund other Reform UK policies

“What we used to do when we were in opposition before 1997 is that as soon as there was a bank holiday and the House was not sitting, as soon as the half-term or the summer recess, we would be on an absolute war footing and dominate the airwaves because that was our opportunity.

“And I think that’s a bit of what Farage has done this week,” Harman added.

“Basically, Farage can dominate the media agenda.”

She went on: “He’s kind of stepped forward, and he’s using this moment of the House not sitting in order to actually get his voice heard.

“It’s sensible for the opposition to take the opportunity of when the House is not sitting to kind of grab the mic and that is what Nigel Farage has done.”

But Baroness Harman said it “doesn’t seem to be what Kemi Badenoch’s doing”.

She explained that the embattled leader “doesn’t seem to be grabbing the mic like Nigel Farage has” during recess, and added that “there’s greater opportunity for the opposition”.

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Sports

Oilers win West, book Cup rematch vs. Panthers

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Oilers win West, book Cup rematch vs. Panthers

DALLAS — Connor McDavid had the breakaway goal that swung the momentum back to the Edmonton Oilers, and their captain happily touched the trophy they got after wrapping up another Western Conference title.

McDavid got that big goal in the second period after an earlier assist, 40-year-old Corey Perry scored again and the Oilers are going to their second Stanley Cup Final in a row after beating the Dallas Stars 6-3 on Thursday night in Game 5 to wrap up the West finals.

When McDavid accepted the Clarence S. Campbell Bowl, he gladly put his hands on it this time.

“It’s pretty obvious I think,” McDavid said about what was different from the end of last year’s West finals. “Don’t touch it last year; you don’t win. Touch it this year; hopefully we win.”

Edmonton scored on its first two shots and jumped ahead 3-0 in the first 8:07 on way to eliminating the Stars in the West finals for the second year in a row.

The Oilers get another rematch, against defending Stanley Cup champion Florida after their series last June went seven games after the Panthers had won the first three games. Game 1 is Wednesday night in Edmonton.

It’s the 12th rematch in Stanley Cup playoff history and the first since 2009 (Pittsburgh Penguins vs. Detroit Red Wings). Oddsmakers made the title odds a toss-up, with the Panthers and Oilers each listed at -110 to win the Cup on Thursday at ESPN BET.

Dallas was within a goal when Thomas Harley had a one-timer blocked by Mattias Ekholm, the Oilers defenseman playing for the first time this postseason. McDavid gathered the long ricochet well past center ice, stayed ahead of speedy Roope Hintz and beat goalie Casey DeSmith with 5:32 left in the second period.

“That’s a Connor McDavid kind of play and that’s just the player he is,” Perry said.

Mattias Janmark, Jeff Skinner, Evander Kane and Kasperi Kapanen also scored for Edmonton, the last an empty-netter in the closing seconds. Leon Draisaitl and Jake Walman each had two assists.

Jason Robertson scored twice and Hintz had a goal for the Stars, who ended their season in the West finals for the third year in a row. Wyatt Johnston and Harley each had two assists.

“You’ve got to keep knocking on the door,” Stars coach Pete DeBoer said. “We chased every single game in this series and that’s a tough way to play hockey against that team. It was the story of the entire series, but the fourth goal, Connor’s goal … puck bounces into the neutral zone, he’s coming off the bench, he’s not missing that. It’s game over.”

DeSmith had taken over in net after starting goalie Jake Oettinger was pulled following Janmark’s goal that made it 2-0 only 7:09 into the game.

Edmonton goalie Stuart Skinner had 14 saves. DeSmith, who hadn’t played since April 26 in Game 1 of the first round against Colorado, stopped 17 of 20 shots.

Perry scored on a power play, assisted by McDavid and Draisaitl, only 2:31 in the game. His seven goals are the most by any player age 39 or older in a single postseason, and the 2007 Stanley Cup champion with Anaheim when he was 22 is now going to his fifth Final in the past six seasons.

That was McDavid’s 100th assist in 90 playoff games, making him the second-fastest player in NHL history to reach that mark. Wayne Gretzky had 100 assists in his first 70 playoff games, and no other player has reached the mark in fewer than 125 games.

Robertson scored a minute into the third period to get the Stars within a goal again. Kane then scored on a shot that went off the skate of Dallas defenseman Esa Lindell and past DeSmith.

Jeff Skinner, the 33-year-old forward who has played 1,078 regular-season games over 15 years with three teams, scored his first career postseason goal for the 3-0 lead. His playoff debut was in the first-round opener against Los Angeles on April 21, but he didn’t play again until Thursday, when the Oilers were without injured forwards Zach Hyman and Connor Brown.

Information from The Associated Press was used in this report.

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Stars’ DeBoer defends call to pull Oettinger early

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Stars' DeBoer defends call to pull Oettinger early

DALLAS — Jake Oettinger is one reason the Stars are in a championship window, yet his Game 5 performance Thursday night was instrumental in Dallas’ third straight Western Conference finals exit.

Oettinger allowed two goals on Edmonton‘s first two shots, leading Stars coach Peter DeBoer to pull his star goaltender, hoping it would spark a change. It did, as Dallas pulled within a goal twice only to watch its season end in a 6-3 loss to the Oilers.

“Any time you pull a goalie the reasoning is to always try and spark your group,” DeBoer said. “So that’s your No. 1 reason. We had talked endlessly in this series about trying to play with the lead, and obviously, we’re in a 2-0 hole right away. I didn’t take that lightly, and I didn’t blame it all on Jake.

“But the reality is, if you go back to last year’s playoffs, he’s lost six of seven games to Edmonton.”

Dallas’ downfall began when rookie forward Mavrik Bourque was called for high-sticking with 18:13 left in the first period. The Oilers needed less than a minute for Corey Perry to score on the man advantage for a 1-0 lead. Mattias Janmark then scored nearly five minutes later for a 2-0 lead.

The early deficit continued a trend for the Stars, who allowed the first goal in their past seven playoff games going back to Game 5 of their semifinal series against the Winnipeg Jets.

Casey DeSmith relieved Oettinger, who logged 7:09 in ice time in his second appearance this postseason. His first came in the Stars’ 4-0 loss to the Colorado Avalanche in Game 4 of the quarterfinals, when he played 19:50.

DeSmith stopped the first two shots he faced, but the Oilers took a 3-0 lead on the third via Jeff Skinner, who entered the lineup after Zach Hyman suffered an injury in Game 4 that is expected to keep him out throughout the Stanley Cup Final against the Florida Panthers.

The Stars twice cut the deficit to one goal. Jason Robertson scored the first of his two goals with 8:20 left in the opening period before Roope Hintz scored on a power-play goal with 7:33 remaining in the second, trimming the lead to 3-2.

Oilers superstar captain Connor McDavid countered on a breakaway, maneuvering past Hintz and scoring for a 4-2 edge with 5:32 left in the second.

Robertson’s second goal just 38 seconds into the third brought it to within one again, but Evander Kane‘s attempt to throw a pass into the slot was redirected off Esa Lindell‘s skate and into the net for a 5-3 lead less than three minutes later.

That effectively ended the Stars’ comeback before Kasperi Kapanen‘s empty-netter pushed it to 6-3 with 11 seconds left.

“I don’t know the timing of it, but I think they scored pretty quickly both times,” Robertson said of the Stars coming within a goal. “It’s disappointing.”

Robertson was then asked about the message sent by DeBoer regarding the decision to pull Oettinger.

“We gotta step up,” he said. “It’s unacceptable for us to let him hang him out like that. The whole playoffs, he’s been our guy. The whole season. It’s unacceptable.”

Oettinger, who won more than 30 regular-season games for a fourth straight season, began last year’s Western Conference finals with a 2.08 goals-against average and a .940 save percentage through the first three games as the Stars took a 2-1 lead. But he then lost the next three games while posting a 3.09 GAA and a .847 save percentage with the Stars falling in Game 6 despite allowing only 10 shots on goal.

Dallas opened this series with a comeback 6-3 win as Oettinger gave up three goals on 24 shots. Game 4 was the only time this series in which his save percentage exceeded .900 (.935 after stopping 29 of 31 shots).

“So, it was to partly spark our team and wake them up,” DeBoer said. “And partly knowing [the] status quo had not been working, and that’s a pretty big sample size.”

Oettinger’s early exit adds to what will be an offseason of intrigue for a Stars team that has several financial decisions to make in what is expected to be an active offseason in the Western Conference.

PuckPedia projects the team will have a little more than $4.96 million remaining in cap space because it traded for Mikko Rantanen and signed him to an eight-year deal worth $12 million annually, in addition to the pay bumps players such as Wyatt Johnston and Oettinger will receive starting next season.

Dallas will have a seven-player class of unrestricted free agents led by captain Jamie Benn and Matt Duchene. Benn told ESPN in late March that he didn’t envision playing for any other team.

Along with reconfiguring parts of their roster, the Stars also will use the offseason to reconcile what it means to be the first team in NHL history to reach three straight conference finals and not advance to the Stanley Cup Final.

“The examples are endless in this league,” DeBoer said. “You know, the Washington Capitals, a decade of knocking on the door. You know, on and on. It’s a really, really hard league to win in. And when you get down to the end of the final four here, it gets exponentially tougher.”

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