The Fed decided to raise interest rates by another 0.25%, despite many economists calling for a pause. because of concern that it will affect the banking sector which has been heavily turbulent over the past week
On Wednesday, March 22, 2023, the US Federal Reserve (Fed) announced that they decided to raise their benchmark interest rate by another 0.25% to 4.75% to 5%, the highest since 2007, to fight stagnating inflation. high
as expected by investors and economists
Despite risks to financial stability
and upset the banking sector
The mission of the US Federal Reserve
It has become increasingly difficult to control inflation in recent weeks.
After the collapse of Silicon Valley banks
And the US Signature Bank, which has spread to other banks around the world, forcing the Fed to try to balance the financial crisis, skyrocketing inflation
or a tight labor market
In a statement after the Fed's meeting
they admit
Recent turbulence in financial markets.
Affects inflation and the economy.
But they are also confident in the overall system that
US banking system
Still strong and recovering quickly
“Recent situations may result in
Household and business credit conditions tightened.
Stall economic activity, employment and inflation.
But the extent of the impact of this remains unclear,” the Fed said in a statement.
and reiterated that
They remain primarily wary of inflation risks.
The turbulence in the banking sector in recent weeks
Not only does it raise concerns that
Federal Reserve
May raise interest rates too fast and trigger an economic recession.
But it could also result in more bank collapses.
Until many famous economists came out to demand that the Fed stop raising interest rates first.
But the latest interest rate hike
which is the ninth time in a row, sending a clear signal that
Federal Reserve
It also prioritizes restoring price stability.
source: cnn