(Washington) 180 degree turn around the Fed: The bankruptcy of the SVB bank could slow rate hikes, or even sound the death knell, when a stronger than expected hike was expected a few days ago.

“Recent developments significantly increase the likelihood that (the Fed) will refrain from raising rates on March 22” at its next meeting, Wells Fargo analysts said in a note.

They therefore expect rates to remain within their current range of 4.50 to 4.75%.

The majority of market players, however, expect an increase of a quarter of a percentage point (25 basis points), according to the assessment of CME Group. An increase which would then be identical to that announced on February 1 at the end of the previous meeting.

These expectations mark a quick and dramatic turnaround from last week, when they were expecting a half-point rise (50 basis points). Fed Chairman Jerome Powell had just warned that inflation remained far too high, and that rates could rise more than expected.

But in the meantime, the collapse of Silicon Valley Bank (SVB) and two smaller establishments, Signature Bank and Silvergate Bank, has shaken global finance.

Last week had “started with Jerome Powell suggesting … an even more aggressive policy response and ended with the collapse of two midsize US banks,” SVB and Signature Bank, notes Neil Shearing, chief economist for Capital. Economics, in a footnote.

And according to him, since the Fed’s actions take months to take full effect, it should “take a more gradual approach … from now on”.

In addition, inflation slowed in February, to 6.0% over one year, according to the CPI index, published on Tuesday and which refers. This is still far too high, however, for the taste of the Fed, which wants to reduce price inflation to 2% over one year. However, it favors another measure, the PCE index, which rose again in January, to 5.4% over one year.

The February figures “keep the pressure on the Fed to continue” raising rates, Ryan Sweet, an economist for Oxford Economics, commented in a note.

“We see the Fed continuing to raise interest rates to slow the economy and dampen inflation. They will also need to ensure that they offer support and provide liquidity to the banking system,” he detailed.

The pressure is therefore intensifying around the Fed, especially since the monetary tightening that it has operated at a forced march for a year has contributed to weakening the commercial banks.

To fight against inflation, the Fed has been raising its main key rate for the past year, which increases the cost of credit to slow down consumption. With limited effect so far.

The Fed is ready “to tighten until something breaks.” The collapse of SVB and the seizure of Signature Bank are signs that this is starting to happen,” commented John Canavan, economist for Oxford Economics.

It is therefore ultimately neither the inflation figures nor the employment figures that could have the greatest impact on Fed policy, but these bank failures.

And, looking beyond next week’s meeting, the Fed won’t be able to raise rates further “unless financial markets and the banking system show signs of stabilizing,” Wells Fargo analysts point out.

A wave of bank withdrawals caused the failure of three American banks last week, including SVB, which could no longer cope with massive withdrawals from its customers, and was closed on Friday by American authorities.

The latter announced on Sunday a series of measures to reassure individuals and businesses about the solidity of the American banking system and will in particular guarantee the withdrawal of all deposits from SVB.