The US Federal Reserve (Fed) is set to raise rates by a quarter of a percentage point on Wednesday, making it its 10th straight rate hike in just over a year. The US central bank is under pressure for an aggressive monetary tightening campaign.
At the end of the two-day meeting, the Federal Open Market Committee is expected to raise the benchmark policy rate to a new target range of 5-5.25%, the highest level since mid-2007.
Conference continues to see medium-sized lenders broken After a series of bank failures.
First Republic on Monday became the third bank seized by U.S. regulators in the past two months. hasty takeover By JP Morgan.following an emergency measures Government officials took just days before the last Fed meeting in March to stem the contagion after the implosion of Silicon Valley and signature banks.
Officials on Wednesday will have to face the challenge of balancing a potential credit crunch stemming from the bank turmoil against the fact that inflation remains high and price pressures are easing gradually. yeah.
Meanwhile, the Fed is under political pressure. In Tuesday’s letter, 10 Democratic lawmakers urged Fed Chairman Jay Powell to refrain from further rate hikes, which could “cause a recession, put millions out of work and crush small businesses.” warned that there is
Federal Reserve policymakers are not expected to fence themselves off by ruling out further rate hikes. But most economists believe Wednesday’s increase will be the last in the cycle, especially after Fed staff have been unhappy with the outlook and have begun predicting a recession this year.
In March, the FOMC said “some additional policy firming could be appropriate,” a easing of guidance that had been in place since March 2022 when the central bank said there was a need for “continued increases.” There is a possibility,” he suggested.
Most Fed watchers expect the Fed to either stick with the latest wording or make some modest changes.
Others believe the Fed may revisit the language it last used at the end of its 2006 tightening campaign. . . will depend on how the outlook for inflation and economic growth develops.”
