The markets were especially volatile last week as turbulence in the banking sector was seen here in the U.S. as well as Europe. Part of the issue stems from central banks hiking rates so quickly in such a short period of time, which impacts banks’ interest margins and can lead to liquidity issues, especially if depositors drain their money from banks to take advantage of other higher-yielding options.

What’s the bottom line? This Wednesday brings a crucial decision from the Fed, as they will announce whether they will again hike their benchmark Fed Funds Rate. This is the interest rate for overnight borrowing for banks and it is not the same as mortgage rates. The Fed has hiked the Fed Funds Rate eight times since last March, bringing it to a range of 4.5% to 4.75%.

When the Fed hikes the Fed Funds Rate, they are trying to slow the economy and curb inflation, which continues to ease per the latest CPI and PPI reports as noted above. Will the Fed pause additional hikes to avoid adding more pressure to the banking sector? Their actions and commentary will be crucial to watch in the week ahead.