The US Federal Reserve will not be deterred from raising interest rates. It increased the key ratio by 0.25 percentage points to the new range of 4.75 percent to 5.0 percent.
The US Federal Reserve continues its series of interest rate hikes despite the recent bank earthquake. On Wednesday, it increased the key rate by a quarter point to the new range of 4.75 percent to 5.0 percent. The problems of regional banks such as the SVB, which went bankrupt in the USA, have recently led to speculation that the Fed may take a break after about a year of interest rate hikes.
Rate hike against inflation
It is considered that the difficulties faced by financial institutions are the result of rapidly increasing interest rates in order to fight inflation. Despite falling to 6.0 percent, it still remained well above the Fed’s 2.0 percent target. Currency watchers have now signaled that they want to continue to challenge the upward trend in prices.
In their updated projections, money watchers forecast an average interest rate level of 5.1 percent for the year-end, as they had already targeted in December. Problems experienced in many financial institutions due to rising interest rates have recently increased expectations that the Fed may make smaller interest rate hikes in the future to fight inflation in order to prevent a wider crisis.
But some analysts found this scenario unrealistic before the decision was made: “To fix the banking problem, you really have to go back to very low interest rates, and I don’t think that will happen,” said Paul Nolte, portfolio manager at Kingsview, asset manager in Chicago.
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