Banks once again.

The US Federal Reserve's Federal Open Market Committee (FOMC) is to meet tomorrow and day after to decide on whether to increase its Funds Rate and by how much. "Even with turmoil in the banking industry and uncertainty ahead, the Federal Reserve likely will approve a quarter-percentage-point interest rate increase..., according to market pricing and many Wall Street experts." CNBC. Great uncertainty was created by Fed chair Jerome Powell in his testimony to Congress earlier this month, when he said, "The latest economic data have come in stronger than expected," and so, "If the totality of data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes." CNN. Then the Silicon Valley Bank failed because it had parked excess funds in long dated US Treasuries which dropped in value as interest rates have risen, causing mark to market losses, and resulting in a run on the bank. TOI. Two days later, the New York-based Signature bank collapsed and was taken over by the Federal Deposit Insurance Corporation (FDIC) which had rescued SVB as well. Reuters. On 16 March, the biggest US banks, including JP Morgan Chase, Citigroup, Bank of America, Wells Fargo, Goldman Sachs and Morgan Stanley, put together a $30 billion rescue package for the First Republic Bank. ET. Yesterday, "Troubled bank Credit Suisse has been rescued by its Swiss rival UBS in a government-backed deal." BBC. "Credit Suisse shareholders were deprived of a vote and will receive one share of UBS for every 22.48 shares they own, valuing the bank at $3.15bn." "Soon after the announcement late on Sunday (yesterday), the US Federal Reserve, European Central Bank and other major central banks came out with statements to reassure markets that have been walloped by a banking crisis that started with the collapse of two regional US banks earlier this month." Reuters. Despite all this mayhem, "Policymakers at the European Central Bank (ECB) announced on Thursday (16 March) that they would go through with a planned 0.5% interest rate hike as the institution juggles both inflation and financial uncertainty amid turmoil that has gripped financial markets." DW. This is because prices increased at 8.5% in February in the 20-member euro zone countries. "Headline inflation stood as high as 10.6% in October, but reached a revised 8.6% in January." CNBC. The ECB has got itself into this mess because it had a negative interest rate for 8 years and raised it to 0% from minus 0.5% only in July 2022. DW. There was the ridiculous situation of Denmark's Jyske Bank "offering home buyers 10-year mortgages at an interest rate of -0.5%. That means borrowers over a decade will pay back less than the amount borrowed, not including one-time fees." Washington Post. That is because Denmark became the first country to impose negative interest rates, which meant savers had to pay for keeping money in banks. Reuters. This was to recover from the Great Recession caused by the collapse of Lehman Brothers due to the US 2007-08 subprime crisis (Investopedia). Seems that the treatment is creating the same problem. Too much of a good thing.