The Federal Reserve is raising the key interest rate by 0.25 percentage point, underlining central bankers’ commitment to fighting inflation even if it increases financial pressure on the country’s banks.
The bank’s rate-setting body said the Fed’s benchmark interest rate is rising to a range of 4.75% to 5%. statement.
sudden Silicon Valley bank collapse on March 10 and Signature Bank of New York two days later raised concerns that anxious depositors might rush to withdraw their money from other regional lenders, sparking a broader crisis.
In its statement, the Fed’s rate-setting committee noted that banks’ new caution is likely to weigh on the economy, writing, “Recent developments are likely to tighten credit conditions for households and businesses and impact economic activity, employment, and inflation.” The extent of these effects is uncertain.”
“The committee remains very concerned about inflation risks,” the statement said, adding that the Fed is “firmly committed to returning inflation to its 2 percent target.”
But the Fed has also hinted that it is ready to hold off on further interest rate increases depending on economic conditions, saying it will “closely monitor the information received and assess the implications for monetary policy.”
Federal Reserve Chairman Jerome Powell is scheduled to speak to reporters at 2:30 PM ET, where he will provide his outlook on the economy.
Thanks for reading CBS News.
Create your free account or login
for more features.