Fed Pause Could Depend on Tighter Lending Conditions

The likelihood of a pause in the Federal Reserve’s interest-rate raising campaign after the next Federal Open Market Committee meeting depends on how much damage the banking crisis has caused, BNP Paribas Chief U.S. Economist Carl Riccadonna says. He estimates that tighter lending conditions stemming from the Silicon Valley Bank debacle are worth up to 50 basis points in the fed-funds rate. It would make an expected 25 basis point rate increase in May, to 5%-5.25%, enough to achieve the Fed’s goal for now. “If banks are doing less, the Fed will need to do more,” Mr. Riccadonna says. Markets are pricing a pause in June,…