U.S Federal Reserve Raises Interest Rates Another 0.25% - Modern Distribution Management

U.S Federal Reserve Raises Interest Rates Another 0.25%

The U.S. central bank signaled that the latest rate hike may not be the last, but is likely nearing the end of aggressive increases.

Despite the March 10 collapse of Silicon Valley Bank that raised nationwide anxiety levels about a possible banking industry collapse, the U.S. Federal Reserve raised the nation’s benchmark interest rate by another 0.25% in an effort to combat inflation. 

The increase matched most economists’ projections.

Pointing to indicators showing modest growth in consumer spending and industrial production, the Fed signaled that the latest quarter-point rate hike won’t be the last, though it is likely nearing the end of aggressive increases.

The latest increase puts the current federal funds rate target range at 4.75% to 5%.

Like in the Fed’s past Federal Open Market Committee statements over the past two years, the central bank noted that it seeks to achieve maximum employment and move inflation down to a long-term rate of 2%. The committee left the door open for future increases by saying it anticipates that “some additional policy firming may be appropriate” to attain a monetary policy to reach that 2% inflation goal.

In wake of the SVB bank collapse, the Fed noted “The U.S. banking system is sound and resilient. Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. The extent of these effects is uncertain. The Committee remains highly attentive to inflation risks.”

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