The Federal Reserve — the U.S. central bank, or simply the Fed — has raised interest rates for the ninth time in a row.
Interest rates have been raised by 0.25 percentage points to reduce inflation, which in the U.S. stay at 6% In the 12 months to February.
Higher growth expected before crash Silicon Valley Bankrescue of US regional banks and the acquisition of Credit Suisse.
Earlier this month, before the worst banking turmoil since 2008 began, Federal Reserve Chairman Jerome Powell floated the idea of a half-percentage-point hike, or faster rate hikes. After the Fed raised interest rates by 0.25 percentage points last month, plans to raise interest rates have slowed.
Higher interest rates lead to higher profits for lenders, but also put pressure on banks as some government bonds, state IOUs, depreciate in value.
U.S. interest rates held steady after Wednesday’s hike 4.75% to 5%, from 4.5% to 4.75% last increase In February.
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In the US, interest rates are a range rather than a single percentage like in the UK because the Fed is not allowed to set a specific number.
Instead, the target rate is set as a guideline for banks to follow.
Some economists had expected the Fed to pause rate hikes.
Responding to concerns in the banking sector, the Fed said the U.S. banking system is sound and resilient, but the impact of recent developments was unclear.
“Recent developments are likely to lead to a tightening of credit conditions for households and businesses, and to weigh on economic activity, employment, and inflation. The extent of these effects is uncertain.”
This is the Fed’s first interest rate forecast since last December.
On Wednesday, Powell said continued rate hikes were no longer appropriate for the goal of reducing inflation to 2%. Instead, he said “some” additional salary increase “may be appropriate”.
“We are committed to learning from this incident and working to prevent it from happening again,” he said of the banking turmoil.