Brace for more banking shocks with the Fed in a 'twilight zone' where it can't tame inflation without threatening financial stability, Fidelity warns

• The banking turmoil might not be over just yet, according to Fidelity.
• The Fed is in a "twilight zone" where it can't tame inflation without hurting financial stability, Fidelity said.
• Higher-yielding money-market funds also threaten the banking sector, strategists warned.

There may be further turmoil ahead for the US's embattled banking sector, as the Federal Reserve is forced to pick between curbing inflation and ensuring financial stability, according to Fidelity Investments.

The asset-management titan said earlier this month that the Fed is trapped in a "twilight zone" where it is unable to tame soaring prices without increasing the risk of further banking shocks.