Moody’s Investors Service, one of the world’s top three credit rating agencies, said on the 14th (local time) that it has lowered its outlook for the U.S. overall banking system from “positive” to “negative.” U.S. President Joe Biden stressed in a speech the previous day that “Americans can rest assured that our banking system is safe,” but made the decision after a series of problems occurred in small and medium-sized U.S. banks such as Silicon Valley Bank (SVB).
According to CNBC and other foreign media, Moody’s Investors Services explained in the report, “It reflects the rapid deterioration of the business environment (of U.S. banks) due to the withdrawal of deposits at SVB, Silvergate Bank, and Signature Bank and the bankruptcy of these banks.”
The report diagnosed that although the U.S. federal authorities have come up with measures to strengthen the safety net due to the series of collapse of SVB and Signature Bank, financial institutions such as SVB, which have a lot of excess deposits and a lot of current value of their assets, are still at risk.
Some predict that some expectations that the U.S. Federal Reserve (Fed) could freeze its key interest rate in consideration of the crisis in the banking industry are losing steam. Moody’s predicted that interest rates could continue to rise for the time being, adding, “Interest rates are likely to remain high for a long time until inflation returns to the Fed’s target range.”
Jason Pride, chief investment officer (CIO) of “Glennmed Private Wells,” said, “There are many different views on the range of interest rate hikes, but the 0.25 percentage point increase is still on the table.”