The dramatic collapse of Silicon Valley Bank and the market turmoil it unleashed is part of the 'battle between fire and ice' in global efforts to curb inflation after years of cheap money, Morgan Stanley co-president Ted Pick said on Tuesday.
A customer is escorted into the Silicon Valley Bank headquarters in Santa Clara, California, U.S., March 13, 2023. REUTERS/Brittany Hosea-Small
LONDON, March 14 - The dramatic collapse of Silicon Valley Bank and the market turmoil it unleashed is part of the "battle between fire and ice" in global efforts to curb inflation after years of cheap money, Morgan Stanley co-president Ted Pick said on Tuesday. Steep rises in interest rates by the Federal Reserve and other central banks to combat soaring consumer prices had inevitably led to flare-ups of stress, Pick told the Morgan Stanley European Financials Conference, adding that failed U.S. lenders SVB and Signature Bank were casualties of this.
"This is part of the process of the knob being turned to tighten financial conditions to make sure that we are on our way to normalising a higher interest rate world," Pick said. "But there might well be surprises, there might well be reactions," he said, adding the market was around halfway through a fight to "slay inflation" that would be waged over 12 to 18 months.as worries about potential contagion to other lenders deepened.
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