In the early morning of March 23, the Federal Reserve announced another 25 basis point rate hike. At the same time, Powell continued to be hawkish in his speech, rejecting the optimistic expectations of "pause of rate hikes" and "rate cuts within the year" speculated by the market. BlockBeats sorted out and compiled the views of some important figures in the market on this rate hike and their expectations for the future market as follows. Arthur Hayes, founder of BitMEX: The faster the Fed raises interest rates, the faster the rate cuts. The faster Powell raises interest rates, the faster he must cut interest rates. I will buy on dips when the price of Bitcoin falls. Thank you Powell for providing more entry opportunities. BTC will reach $1 million. Previously, Hayes analyzed in his latest article Kaiseki on March 16 that unless short-term interest rates are reduced to the point where banks can offer deposit rates that compete with reverse repurchase tools and short-term treasury bonds to attract depositors back, the banking system cannot return to profitability (thus creating more loans). The market is shouting for deflation supported by the banking system, and the Fed will eventually listen. Even if it does not start cutting interest rates at the March meeting, a severe recession in a few months will force it to turn. Raoul Pal, founder of Real Vision: If the banking crisis rapidly intensifies, the Fed will make an emergency rate cut If the Fed raises the federal funds rate to 5% and takes a tightening bias, this may weaken the banks. Weaker banks may experience financial difficulties, which may lead to a loss of confidence in the banking system and trigger a run on deposits. In this case, US Treasury Secretary Yellen may step in to guarantee deposits. Yellen's deposit guarantee may not work in this case because short-term interest rates have risen too quickly, causing the yield curve to invert. If depositors expect interest rates to rise, they may withdraw funds from banks and invest in assets with higher yields. This may cause a liquidity crisis for banks and make Yellen's guarantee invalid. My guess is that if the banking crisis rapidly intensifies, the Fed may need to make an emergency rate cut. Bill Ackman, CEO of Pershing Square: 5% interest rates will lead to accelerated outflows of bank deposits Consider the impact of recent events on the long-term equity capital cost of non-systemically important banks, where you can wake up one day as a shareholder or bondholder and your investment is immediately zero.Add to that the higher cost of debt and deposits from rising interest rates, and consider what this will do to lending rates and our economy. The longer this banking crisis lasts, the more damage it will do to small banks and their ability to access low-cost capital. Trust and confidence are earned over many years, but can be lost in a matter of days. I worry we are headed for another train wreck (leading to another bad outcome). Hopefully our regulators will do the right thing. 5% interest rates make bank deposits much less attractive, and I would be surprised if deposit outflows don't accelerate immediately. Temporary system-wide deposit insurance is needed to stop the bleeding, and the longer the uncertainty lasts, the more lasting the damage to small banks and the harder it will be to win back customers. Citi CEO Fraser: The Fed's responsibility is to fight inflation, and the rate hike is in line with expectations The Fed's first responsibility is to fight inflation, and the rate hike is in line with Citi's expectations. Only a small portion of the population is negatively affected by the Fed's rate hikes. The impact of individual bank failures will not spread to the entire U.S. banking system, and this is not a credit crisis. Regulators have done a good job in responding quickly to the bank failure crisis. Nick Timiraos, the "Fed Mouthpiece": The Fed abandons the eight-month-long phrase "continued rate hikes will be appropriate" The Fed raised the benchmark federal funds rate by another 25 basis points to between 4.75% and 5%, the highest level since September 2007. Fed officials hinted in their post-meeting policy statement that they may soon stop raising rates. The statement said: "The committee expects that some additional policy tightening may be appropriate." Fed officials abandoned the wording used in the first eight statements that the committee expects "continued rate hikes" will be appropriate. The turmoil caused by the banking crisis provides the strongest evidence yet that rate hikes have spillover effects on the broader economy. The turmoil is a powerful reminder of the dangers faced by Fed officials, regulators, members of Congress and the White House in trying to curb inflation that soared to a 40-year high last year. U.S. policymakers have mitigated the economic shock caused by the COVID-19 pandemic in 2020 and 2021 by providing massive fiscal aid and cheap money.Congress and the White House have largely delegated the task of curbing price pressures to the Fed. The federal funds rate affects other borrowing costs throughout the economy, including mortgage, credit card and auto loan rates. The Fed has been raising interest rates to cool inflation by slowing economic growth. The Fed believes that these policy moves affect markets by tightening financial conditions, such as raising borrowing costs or lowering the prices of stocks and other assets. Two weeks ago, Powell hinted that officials would discuss whether to raise interest rates by 25 basis points or 50 basis points after reports showed that hiring, spending and inflation were stronger at the beginning of this year than they thought at the February meeting. On March 7, Powell testified before the Senate Banking Committee: "To me, there is nothing in the data to suggest that we have tightened too much." CICC: The end of the Fed's rate hike is approaching. The monetary policy statement suggests that the rate hike is approaching the end, and the recent banking turmoil has reduced the need for further rate hikes in the future. But because inflation is resilient, rate cuts will not come soon, and the Fed's guidance on interest rates staying high for longer remains. Compared with the Fed's "calmness", the market does not agree. Investors believe that the Fed has underestimated the potential impact of this round of banking turmoil, and thus included more expectations for interest rate cuts. We believe that the banking turmoil is a demand shock, which will have a suppressive effect on economic growth and inflation, but considering that the United States still faces many supply constraints, this will reduce the impact of demand shocks on inflation, and the final result is more likely to be a "stagflation" pattern. The end of the Fed's interest rate hike is approaching (Powell has repeatedly emphasized that the current banking problems will cause credit tightening, which will also have a suppressive effect on growth and inflation), but the path of interest rate cuts is still very uncertain, depending on the subsequent inflation and the current financial system risks. Too many expectations of interest rate cuts actually imply concerns that the banking system may face risks in the future, which means that unless systemic risks escalate further, the room for the 10-year US Treasury bond rate to further decline at its current position is relatively limited.