Bank failures and inflation woes trigger turmoil in Washington

WASHINGTON, D.C. (NBC) – The finger-pointing is underway in Washington after two banks failed this week and after the release of the latest inflation numbers.

The good news is that prices have come down a bit. But the government’s efforts to fight inflation, even more, might have hit a snag.

With inflation headed in the right direction, it appeared to be a lock that the Federal Reserve would once again raise interest rates at its next meeting. But now, with turmoil in the banking system, all that has changed.

The latest economic indicators show the high prices we’ve all been paying are coming down slowly, which is welcome news for the nation’s economic picture which has gotten more complicated in just the past few days.

Inflation in February was 6% higher than a year ago, down from a peak of more than 9% last June, but still much higher than the government’s target of 2%.

In a statement, President Biden said February’s inflation was the slowest annual increase since September 2021, and the president said he would “…continue working to lower costs.”

But that job largely falls on the Federal Reserve, which appeared all but certain to raise interest rates once again next week. That is until two banks failed over the weekend under the pressure of the rapidly rising rates.

It’s a stunning collapse that some analysts say should have been anticipated.

Now, sources say both the Justice Department and the Securities and Exchange Commission have opened investigations into what led to the failure of Silicon Valley Bank.

As the fallout spreads, Democrats and Republicans appear eager to pin the crisis on each other.

The blame game is underway as Americans wonder whether their banks are safe and whether prices will ever come back down to normal.

Analysts had expected the Fed to raise interest rates by as much as half a point next week to speed up its battle against high prices. But now, after the two banks failed over the weekend, some say it’s possible the Fed takes no action this month to boost confidence in the nation’s banks.