Powell noted the rate-making Federal Open Market Committee’s statement now says “some additional policy firming may be appropriate” - a softer stance indicating that the Fed may not need to implement more interest rate hikes. The Fed has rapidly raised interest rates over the last year. Overall, the banking system has “strong capital and liquidity” and “deposit flows have stabilized,” according to Powell. The Fed chair said a “small number of banks” had experienced “serious difficulties,” but he downplayed further risks for the sector. “You can think of it as being the equivalent of a rate hike or perhaps more than that.” “Such a tightening in financial conditions would work in the same direction as rate tightening,” Powell said. The chairman noted that the decision was “supported by a very strong consensus.” The bank crisis is likely to result in a tightening in credit conditions that could have the same cooling effect on the economy as an interest rate hike, Powell added. In a hotly anticipated decision, the rate-making Federal Open Market Committee hiked its benchmark rate by 0.25% - to a range of 4.75% to 5% - at the conclusion of the Fed’s closely watched policy meeting.įed Chair Jerome Powell told reporters that members of the FOMC “did consider” leaving interest rates unchanged due to concerns about the banking sector, but ultimately pushed ahead with a small hike as inflation runs high. The Federal Reserve hiked interest rates on Wednesday - a pivotal move that showed the central bank’s resolve to tackle inflation despite recent chaos in the US banking sector. Weekly jobless claims unexpectedly drop by 16,000 Jerome Powell tricked by Russian pranksters posing as Zelensky in phone call Weak Fed oversight contributed to SVB’s stunning collapse: probe Fed’s preferred inflation gauge stayed high in March as another rate hike looms
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