Following their most critical meeting to date, the Federal Reserve voted to raise interest rates by another 25bps. The decision was contentious, as there were conflicting opinions about whether continuing rate hikes would help fight inflation or if it would be better to pause increases to promote financial stability amid an emerging banking crisis. Ultimately, the Fed demonstrated its commitment to addressing banking concerns through other means. It has been a full year since the Fed began its interest rate hikes to combat rising inflation. This latest move marks a further quarter-point increase in rates.
Federal Reserve raises interest rates by 25bps
Yesterday, the Federal Reserve convened to make a critical decision on whether or not to continue raising interest rates in light of the precarious economic conditions. This move had far-reaching implications for their year-long effort to combat inflation and the global economy at large.
Recent headlines have been dominated by news of the bank crisis in America and worldwide, with
Silicon Valley Bank, Signature Bank, and
First Republic Bank amongst the most notable closures since the 2008 financial crisis. The report’s final sentence was enough to cause panic among investors, yet the Federal Reserve still had to decide. With economic conditions fragile and inflationary pressures still three times above the Fed’s 2% target, many expected a halt to interest rate hikes. Nonetheless, following careful consideration of all factors, the Federal Reserve announced a 25bps increase. After that, it is up to Chair Jerome Powell and the rest of the Fed to ensure they can contain banking
