Business, Finance & Tech
The Fed lifts rates by a quarter point
(CNN) — The Federal Reserve voted unanimously to raise interest rates by a quarter point Wednesday, the tenth rate hike since the central bank started its battle against inflation last March.
The move comes amid ongoing fragility in the banking sector triggered partly by higher interest rates, and following the collapse of three regional banks. Markets had anticipated the rate hike, and remained fairly muted after the Fed’s announcement.
The quarter-point increase brings the benchmark federal funds rate to a level of 5%-5.25%, its highest level in more than 15 years.
The Fed’s post-meeting statement re-emphasized the central bank’s commitment to bringing down inflation, and left additional rate increases a possibility, depending on developments in the financial system and on inflation.
Tellingly, the Fed’s statement did not include a notation that “some additional policy firming may be appropriate,” which was included in its prior release. That omission leaves open the possibility for an upcoming pause in rate hikes.
The Fed also noted that tougher lending standards are likely to slow the economy, which could help the central bank achieve its targeted inflation goal.
“Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring and inflation,” the statement said. “The extent of those effects remains uncertain.”
Federal Reserve Chairman Jerome Powell’s press conference at 2:30 p.m. ET will offer more detail on the trajectory of rate hikes in the months ahead.
This story is developing and will be updated.
The-CNN-Wire
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By: Ceci Partridge
May 3, 2023
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