On Wednesday, the Fed decided to raise interest rates by 25 basis points. Some experts expected such a decision, although voices were heard that in the context of the growing banking crisis in the US, there would be no increase this time.
The Federal Open Market Committee decided on Wednesday to raise US interest rates by 25 basis points to a range of 4.75-5%. Thus, US interest rates reached their highest level since September 2007.
US interest rates. Different expectations
Although today’s decision was unanimous and in line with the expectations of the market and most analysts, there were voices that in the context of the growing banking crisis in the US, the Federal Reserve will refrain from raising interest rates this time.
This is the second consecutive rate increase of 25 points. In December, the rate hike was 50 basis points. In the previous four meetings, the Fed raised rates by 75 basis points. In total, the federal funds rate has been raised by 475 basis points since March, making it the steepest cycle of increase since 1981.
Until recently, a 25 basis point interest rate hike seemed like the bare minimum. In early March, Fed Chairman Jerome Powell made it clear that due to the persistent decline in inflation, March rate hikes would be higher.
– Looking at the latest data, we can expect further growth in interest rates. It is possible that the Fed will have to increase the pace of rate hikes, and the peak in interest rates will certainly be higher than we previously thought - said the head of the Fed during a hearing in the Senate Banking Committee, where he presented a report on the state of the economy and monetary policy.
However, this speech took place before the collapse of Silicon Valley Bank and before the authorities closed the New York Signature Bank.
Source: Wprost
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