On Wednesday, the Fed decided to raise interest rates in the US again. Today, the head of the institution, Jerome Powell, referred to this decision. He revealed whether a rate cut is possible this year.
Recall that the Fed decided on Wednesday to raise interest rates in the US by 25 basis points to a range of 4.75-5 percent. Thus, US interest rates reached their highest level since September 2007.
US interest rates. dynamic march
Yesterday’s decision by the Fed did not come as a surprise, although there were voices that this time the Fed might refrain from raising rates. And even in early March, a 50 basis point rise seemed almost inevitable. Fed chief Jerome Powell spoke about this in his speech.
– 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, stability problems arose for some of the regional banks in the US shortly thereafter. Institutions such as Silicon Valley Bank, Signature Bank, Silvergate Capital, or First Republic Bank are having problems in part because of higher interest rates (resulting in lower Treasury bond prices, which affects the capital of lenders).
Now the head of the Fed points to the consequences that may follow if the problems of individual banks are not resolved. “Over the past two weeks, a small number of banks have experienced serious difficulties. History shows that individual banking problems, if left unresolved, can undermine confidence in sound banks and jeopardize the ability of the entire banking system to play a vital role in supporting the savings and credit needs of households and businesses. In response to these developments, we have taken decisive action to portray the US economy and build public confidence in our banking system. Powell said.
- Events in the banking system of the last two weeks are likely to lead to tighter lending conditions for households and businesses, which, in turn, will affect economic performance. It is too early to determine the magnitude of these effects and too early to tell how monetary policy should respond. added.
Fed chairman on interest rate cut this year
Powell said the Fed will closely monitor the incoming data and carefully assess “the actual and expected impact of the tightening of credit conditions on economic activity, the labor market and inflation.”
Source: Wprost
I am George Brown, author at Daily News Hack. I mostly cover economy news and I have been doing this for quite some time now. I have a lot of experience in this field and I’m always looking for new opportunities to learn more.
