Federal Reserve Raises Interest Rates Again Amid Bank Troubles
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.”
Featured Coverage of this Story
From the LeftFederal Reserve raises interest rates 0.25% to highest since 2007 amid bank crisis
The Federal Reserve raised the target range for its benchmark interest rate by 0.25% on Wednesday as it battles stubborn inflation and a banking crisis which has pushed the central bank into taking its most significant emergency actions since the onset of the pandemic.
The rate hike brings the Fed's policy rate, the federal funds rate, to a new range of 4.75%-5%, the highest since October 2007.
In its statement, the Fed said inflation remains elevated and that the central bank remains "highly attentive to inflation risks," while banking issues could cause...
From the CenterFed hikes rates despite concerns over banking crisis
The Federal Reserve hiked interest rates by 0.25 percentage points on Wednesday after numerous failures in the banking sector had prompted some analysts on Wall Street to call for a pause.
The quarter-point hike is the ninth consecutive rate increase by the Fed since March of last year as part of the U.S. central bank’s program of quantitative tightening undertaken in response to high inflation. The Fed’s baseline interest rate range is now set to 4.75 to 5 percent.
From the RightFed raises interest rates a quarter point despite recent banking turmoil
The Federal Reserve on Wednesday raised its benchmark interest rate by a quarter of a point, forging ahead with its fight against stubborn inflation despite a spate of bank failures and a growing crisis within the financial sector.
The unanimous decision puts the key benchmark federal funds rate at a range of 4.75% to 5%, the highest since 2007, from near zero just one year ago. It marks the ninth consecutive rate increase, following a half-point hike in December and four jumbo-sized 75-basis-point hikes before that.
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