LIVE: expectation in the markets for the decision of the United States Federal Reserve on interest rates

European Central Bank President Christine Lagarde speaks before the European Parliament’s Committee on Economic and Monetary Affairs in Brussels, Belgium. March 20, 2023. REUTERS/Johanna Geron

The president of the European Central Bank, Christine Lagarde, warned that the recent tensions originated around the banking sector generate “new risks” for the economy.

The turbulence caused by the bankruptcies of several banks and the serious financial problems of other entities caused “new downward risks” for the economy, Lagarde declared at a forum in Frankfurt (Germany).

The ECB president also defended that there is still “a way to go to contain” inflation which, according to her institution’s forecasts, will not return to around 2% until 2025.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, United States, March 16, 2023. REUTERS/Brendan McDermid/File Photo

The futures of the main Wall Street indexes registered little movement this Wednesday, awaiting the decision of the FED.

Dow Jones futures were unchanged, while S&P 500 futures were down 0.1%.

On Tuesday, indices rose as the worst fears about the health of global banks allayed. The main US indices rose between 1% and 1.6%.

German stock price index DAX chart is shown after Switzerland’s UBS has agreed to buy rival Credit Suisse in a merger engineered by Swiss authorities, at the stock exchange in Frankfurt, Germany March 20, 2023. REUTERS/Staff/File Photo

World stocks rose to their highest level in almost two weeks on Wednesday, although cautious optimism that a banking crisis will be avoided was tempered by uncertainty ahead of a high-level Federal Reserve meeting that could decide a further increase in interest rates.

European stocks were up 0.1% in London and 0.5% in Frankfurt and Asia-Pacific shares outside Japan added 1.3%.

Japan’s Nikkei rose 1.9%, led by a rally in bearish bank stocks.

The MSCI World Stock Index rose a third of a percentage point, reaching its highest level in almost two weeks.

Efforts by regulators and policy makers around the world to counter the turbulence in the banking sector have helped stem the decline in markets and now the focus is on whether the Federal Reserve will give markets more reason to recover.

The Federal Reserve is considering further interest rate hikes after the banking turmoil

The combination of good economic data at the beginning of the year and uncertainty in the banking sector has led most analysts to forecast that the US central bank will continue with a more modest hike cycle than expected.

FILE PHOTO: The Federal Reserve Building in Washington, U.S., March 19, 2019. REUTERS/Leah Millis

US banks will pay close attention to the Federal Reserve’s interest rate decision on Wednesday, following two weeks of market turmoil over the bankruptcy of three regional lenders.

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