key takeaways
- The Federal Reserve has raised rates by 0.25%
- Federal interest rates now sit in a range between 4.75% and 5%.
- The Fed’s decision comes shortly after the second largest bank failure in US history.
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Despite the implosion of Silicon Valley Bank, the Federal Reserve has chosen to continue tightening monetary conditions in the United States.
range from 4.75% to 5%
The Federal Reserve continues its fight against inflation.
The US central bank announced today during the Federal Open Market Committee that it would raise federal interest rates by 25 basis points, bringing them to a range of 4.75% to 5%.
After coming under fire for not taking inflation fears seriously, the Fed began aggressively raising federal interest rates in March 2022. In doing so, the central bank raised the cost of borrowing, which in turn strengthened the US dollar value. At first, the Fed raised rates at a brisk pace, enacting multiple 75 basis point hikes in quick succession, throughout 2022, but slowed at the end of the year, raising rates just 50 basis points in December and 25 basis points in December. basics in February 2023. .
However, according to the latest CPI report, inflation remains at 6% yoy, well above the 2% target often stated by Federal Reserve Chairman Jerome Powell. Powell indicated on March 7 that the central bank was therefore considering resuming aggressive rate hikes.
However the Silicon Valley bank collapse (and the angst of other regional banks) raised concerns about the resilience of the US banking sector in a high interest rate environment, as the Federal Reserve was forced to step in and collateral depositors would be repaid .
Disclosure: At the time of writing, the author of this article owned BTC, ETH, and various other crypto assets.
