The Fed Raises Interest Rates Again in March 2023; US Banking Claimed Resilient

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Adi Ahdiat 24/03/2023 09:50 WIB

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The Fed raised its interest rate target range to 4.75%-5% in March 2023. This is the highest interest rate in 16 years.

The Fed's Interest Rate (January 2007-March 2023)

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The Fed Raises Interest Rates Again in March 2023; US Banking Claimed Resilient

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The Fed's Interest Rate (January 2007-March 2023)

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The Fed raised its interest rate to a range of 4.75%-5% in March 2023. This is the highest interest rate in the last 16 years, as shown in the graph.

The United States (US) central bank raised its benchmark interest rate to lower inflation to a range of 2%.

The Fed also hinted at the possibility of further interest rate hikes in the future. This is because, until the end of February 2023, the US inflation rate was still at 6%.

"In determining the level of future target range adjustments, the Committee will take into account the cumulative tightening of monetary policy to date, and the lags with which monetary policy affects economic activity and inflation, and developments in the economic and financial outlook," said the Fed Committee in its press release on Wednesday (March 22, 2023).

"In addition, the Committee will continue reducing its holdings of Treasury securities, agency debt, and mortgage-backed securities. The Committee is strongly committed to returning inflation to its 2 percent objective," it continued.

The Fed claims that the US economy is generally still healthy, although in mid-March 2023, one major US bank, Silicon Valley Bank, went bankrupt.

"Recent indicators point to moderate growth in spending and production. Job gains have been robust in recent months, and the unemployment rate has remained low, but inflation remains elevated," said the Fed Committee.

"The US banking system is sound and resilient. Recent developments (in the US banking sector) are likely to result in tighter credit conditions for households and businesses, and thereby weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks," they continued.

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."