Headline RoundupMarch 22nd, 2023

Federal Reserve Raises Interest Rates Again Amid Bank Troubles

Summary from the AllSides News Team

The Federal Reserve decided to raise interest rates by another quarter-point on Wednesday, continuing its fight against inflation as banks dealt with the fallout from Silicon Valley Bank’s collapse

Key Quotes: In a statement explaining the decision, the Fed’s Federal Open Market Committee (FOMC) pointed to “modest” economic growth, “robust” jobs gains, and low unemployment. Regarding recent turmoil in the banking industry, the committee said, “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.”

For Context: Silicon Valley Bank is widely considered to have collapsed in part because of its over-reliance on bonds, which lost value when the Fed began raising interest rates to fight inflation. That, and broader fears of financial fallout in the banking system, led some to question the Fed’s interest rate policies. On Wednesday, Sens. Rick Scott (R-FL) and Elizabeth Warren (D-MA) announced a bill to increase oversight of the Fed’s decisions.

How the Media Covered It: Coverage was common across the spectrum, matching trends from previous rate hikes. Some coverage used words like “despite” to potentially frame the Fed’s decision as counterintuitive in the face of a “banking crisis.” 

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