Last week, during a Bloomberg forum, Brian Moynihan suggested the media and market participants might be mischaracterizing March’s regional banking tumult.

Moynihan, who, as it turns out, runs a bank himself, said that, “Crisis is too strong a word.” Even as he implicitly chided hyperbolic accounts, he conceded that SVB’s implosion created “a fair amount of disruption.”

That “disruption” prompted a rethink of the likely trajectory for Fed policy. The day before the (non)crisis escalated, market pricing for the terminal rate in the US approached 6%. Less than a week later, terminal rate pricing was ~4.85%.

“Crisis” or “disruption,” the game changed overnight. Something about the best-laid plans of hawks and men.

If you’re wondering how developed market policymakers reacted to historical (i.e., pre-Lehman) banking crises, the answer is that they generally cut rates within six months, albeit not necessarily in aggressive fashion.

“Central banks have cut interest rates within six months in 70% of pre-GFC historical banking crises,” Goldman’s Joseph Briggs and Giovanni Pierdomenico wrote, in a note dated April 21. “Even in crises in which the economy avoids a recession, they are four times more likely to lower than to raise interest rates.” The figure below illustrates the point.

Half the time, ensuing cuts are “moderate,” where that means between 50bps and 100bps after six months.

Two questions are: 1) Does it matter what the pre-event policy trajectory was? and 2) Does it matter whether inflation was running hot ahead of the crisis?

The answers are “No” and “No.”

“A more rapid pace of pre-crisis rate hikes has generally not been an impediment to rate cuts,” Briggs and Pierdomenico went on to say, adding that “there is no significant relationship between the pre-crisis inflation and post-crisis policy changes.”

I’d note the obvious: It’s possible that any pre-crisis hiking might’ve contributed to banking stress, so it’s not especially surprising that the pre-crisis policy bent isn’t an impediment to post-crisis easing. If you think your rate hikes might’ve triggered a crisis, you’re probably not going to cite the imperative of preserving the hiking momentum you had while explaining a decision not to ease (unless you’re the Fed in 2023.)

Although Goldman thinks the dovish shift in market pricing has probably overshot a bit, the bank does think it’s rational to expect a less aggressive policy path from developed market central banks going forward given last month’s fireworks.

One takeaway in the US context is just that the ~55-60bps of easing the market is pricing over the back half of the year is entirely consistent with the pre-GFC experience in terms of policy reactions to banking crises.

Of course, this wasn’t a crisis, according to America’s No. 2 banker. So maybe this analysis doesn’t apply.