US Federal Reserve announced They raised the benchmark lending level rate on Wednesday, amid continuing inflation and the banking crisis in Country.
The quarter point increase, which was in Line with Expectations, raise the goal range to 4.75-5.00% in the end of for two days policy interview.
The Federal Reserve said in a statement that recent developments in the banking sector “are likely to do so result in Tightening credit conditions for Families, businesses and weight on Economic Activity, Employment and Inflation”.
the policyAppointment of the Federal Open Market Committee (FOMC) added That’s some extra policy Stability may be appropriate “to get into a position constrained enough to bring about inflation.” down.
the latest The increase was the same size as the previous bank mean rate decision in February.
It comes two weeks later of market post-collapse turmoil of Three regional lenders.
Wednesday decision The Fed’s design emphasizes tackling inflation, which remains Stubbornly above policy makers’ long-term annual target of 2% though trying to cut price He increases.
Hot data and banking uncertainty
Bangs of Silicon Valley Bank (SVB) and two other regional lenders have hit bank stocks all over world last week, with Swiss investment bank Swallow Credit Suisse up by regional rival UBS after him shares sunk to record a little.
Asian stock markets and most European indices surged forward of Federal Reserve decision. Stocks were picked on Wall Street up Soon after the Fed announcement.
The three major US stock indices, which were mostly weak before the Fed announcementhe moved higher in Immediately aftermath As investors digested the rally and the accompanying statement.
mix of Hot US economic data in start of the year and uncertainty in The banking sector has led most analysts to expect the Fed to continue with a more Modest gait cycle than previously expected.
After the latest news, recent developments in the financial Markets, we’re kind of seeing right now of risk For Both Sides,” Stephen Juno, senior American economist at a bank of America Global Research, AFP in the future of the decision.
more “doves” language
Treasury Secretary Janet Yellen said on Tuesday that the US banking sector was “stabilizing” after the authorities’ intervention in To protect deposits after failure of SVB and Signature Bank.
But it conceded that “similar measures could be justified if smaller institutions suffered from deposits runs that make up the risk of Contagion.”
Yellen’s comments underscored the relief rebound this week in Stock markets, all along with Actions taken by the Federal Reserve and other major central banks to improve the performance of lenders access for liquidity.
On Wednesday, the Fed also updated Its economic forecasts, resulting in a slight decrease in GDP for 2023 growth Forecast 2023 to 0.4% from 0.5% in December.
Average expectations for Federal Reserve standard rate .in the end of this year Unchanged, while inflation expectations rose slightly.
Federal Reserve announcement He follows on heels of European Central Bank decision last a week to raise interest rates by 0.5 percent points.
Christine Lagarde, President of the European Central Bank, warned on Wednesday, that eurozone monetary policymakers “will still have the floor to cover.” sure That sealed inflation pressures out. “
She said the recent banking turmoil could do that add to “downside risk” in the single currency area.
Senate Majority Leader Schumer concerned About the Federal Reserve rate rise
US Senate Majority Leader Chuck Schumer told reporters on Wed was concerned about the effect of Federal Reserve decision to raise interest rates by a quarter of percentage point.
“There are competing stocks on “Both sides,” Schumer said, “I will say I am concerned about it effect on the economy. “
