The Fed is raising rates again even as stress hits the banking system

 The Fed is raising rates again even as stress hits the banking system

The US Federal Reserve (Fed) hiked rates for a ninth day in a row on Wednesday, continuing its campaign against high inflation despite stress on the banking sector following the collapse of two regional banks. I chose to

Fed policymakers unanimously decided to raise the benchmark interest rate by a quarter percentage point to his just under 5%. This makes it more expensive for someone looking for a car loan or someone with a credit card balance.

Members of the Fed's Interest Rate Setting Committee believe that slightly higher interest rates may be needed to restore price stability. On average, policymakers expect interest rates to rise another half a percentage point by the end of the year, according to new forecasts released Wednesday.

"The Commission understands that further policy tightening may be warranted," the Fed said in a statement.

Bank failures have set off alarm

Some observers have urged central banks to suspend rate hikes at least temporarily to assess the impact of the collapse of Silicon Valley banks and signatories earlier this month. I was asking you to

However, stress on the banking system appears to have eased recently. Treasury Secretary Janet Yellen said on Tuesday that massive withdrawals from local banks had "stabilized."

“The US banking system is sound and resilient,” said her Fed monetary policy statement.

In addition to rising interest rates, tighter credit conditions are leading to slower economic growth.

“Credit is the fat that keeps the wheels of small businesses spinning and the wider economy spinning,” said Kathy Bostjancic, chief economist at Nationwide.

It may help the Fed keep inflation in check, but it also risks the economy slipping into recession. Raise.

Still, Fed policymakers aren't predicting a recession. Rate-setting committee members expect economic growth to average 0.4% this year, according to Wednesday's forecast. They expect the unemployment rate to rise to 4.5% from his 3.6% in February.

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