First Republic Bank shares climb ahead of Fed decision

First Republic Bank and other regional bank stocks rose cautiously early Wednesday ahead of the Federal Reserve’s interest rate decision.

Shares of the San Francisco-based bank fell in after-hours trading, but were almost flat 3% Ahead of the open, it’s a sign that volatility isn’t over yet.

Banking consultants Lazard (ticker: LAZ) and McKinsey & Co. has hired as it explores options including a sale or asset trimming, The Wall Street Journal reported. Bloomberg reported late Tuesday that Wall Street CEOs and U.S. officials were exploring the possibility of government support to secure a deal to raise the First Republic.

First Republic shares ( FRC ) struggled on Tuesday after reports that JPMorgan Chase ( JPM ) CEO Jamie Dimon is leading rescue talks, according to The Wall Street Journal. However, shares are down 90% since early March.

Comments from Treasury Secretary Janet Yellen appeared to help ease fears, as she told a banking conference that “the situation is stabilizing.” He also said the government could take steps to protect depositors of other banks like Silicon Valley Bank and Signature Bank.

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Other regional bank stocks got a much-needed boost on Tuesday after a long period of pressure. Shares of PacWest Bancorp ( PACW ) rose 19%, Western Alliance rose 15% and KeyCorp ( KEY ) rose 9%. The US KBW Bank Index rose 5% – its best daily performance this year.

All eyes will be on the central bank later, as bank stocks continue to rally and make a March decision on interest rates. According to the CME FedWatch tool, expectations have fluctuated significantly over the past ten days, but traders now forecast a 25 basis point hike.

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“There will be a lot of focus on the central bank [will] hike today, but how they view the current volatility and whether they expect more rate hikes after today will be key,” Deutsche Bank analysts said early Wednesday.

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Write to Callum Keown at [email protected]

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