The Federal Reserve is expected to raise interest rates by a quarter of a percentage point on Wednesday, a decision that will land amid a brewing political storm over the U.S. central bank's oversight of collapsed Silicon Valley Bank
of how the Fed supervised the nation's 16th largest bank, an institution with little profile on Main Street until its troubles rocked confidence in other mid-sized lenders who are important providers of business and consumer credit.
The Fed has said its review of SVB's supervision will be finished by May 1 and released to the public. Less clear, and arguably more important, is how a new policy statement assesses the risks to the economy posed by the recent trouble in banking markets, how it characterizes the likely need for further rate increases, and how high officials think the target interest rate will rise by the end of this year.
"Economic data points toward one outcome while conditions in financial markets favor the opposite ... Communication will be a challenge," as the Fed tries to explain what seems a no-win policy choice, said Ryan Sweet, chief U.S. economist at Oxford Economics.
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