the federal reserve raised interest rates again by a quarter of a point on Wednesday, the tenth consecutive increase in the fastest series of increases over the past four decades. But experts estimate it may have been the latest increase, at least for now.
Fed officials had signaled they might stop raising interest rates once they hit them a range of 5 to 5.25%the level reached with Wednesday’s hike.
That’s why experts are being more alert now to what’s coming. With the rate hike, the Fed he wanted to curb inflation without impacting growth too much, but it has also suffered further complications such as the recent banking crisis which has upset mid-range entities such as Silicon Valley Bank and la Repubblica. All of this comes amid a fierce fight to raise the US debt ceiling, which if not raised could drive the country into default.
That’s why Fed officials have weighed each increase cautiously. But the economy has been fairly resilient and inflation is showing staying power, which may make some Fed officials feel this wayThey still have work to do.
The price index reached 9.5% last year and is falling up to 5% annualized in March.
It’s a touchy subject: when the Fed raises interest rates to bring down inflation, it makes it more expensive and more difficult for households to get loans to buy houses or cars or for companies to ask for money for expansions. This slows down consumption and also staff hiring. As wage growth plummets and unemployment soars, people are becoming more cautious and the economy slows further. In this scenario, inflation would come down.
The Fed raised rates by nearly 0 to 5%. The last time rates eclipsed 5% was in the summer of 2007, before the global financial crisis.
These increases have caused “collateral”. Three major US banks have failed since March and had to be bailed out by the government. The theme continued on Monday, with JPMorgan’s purchase of the First Republic.
Many of the banks under pressure in recent weeks have suffered as they have not adequately hedged against rising interest rates, which have reduced the market value of their older mortgages and securities.
Looking ahead, Fed officials will need to consider two questions related to the banking storm: First, whether there will be more trouble with other banks if the rate continues to rise.
Mary Ortiz is a seasoned journalist with a passion for world events. As a writer for News Rebeat, she brings a fresh perspective to the latest global happenings and provides in-depth coverage that offers a deeper understanding of the world around us.