The Federal Reserve raised US interest rates again, by a quarter of a percentage point. As a result, the prime interest rate in the US is now between 5 and 5.25%. But that may have been the last rate hike for a while. US central bank policymakers say further hikes depend on how the economy develops.
That comment gives the Fed some leeway to see what the First Republic Bank fallout will mean this week. In 2006, the central bank similarly changed language when interest rate hikes ended. But at the same time, inflation is still high, the Fed noted. In addition, new jobs are still being created, which also points to a resilient economy.
However, economic growth in the first quarter was disappointing. Households and businesses are also finding it increasingly difficult to access loans, which could impact economic activity, job vacancies and inflation, the Fed said.
High enough
In his remarks, Fed Chairman Jerome Powell said interest rates could now be high enough to contain the economy sufficiently. Inflation can decrease this way, but it can also lead to a recession. Powell himself doesn’t think it will make it to the United States. According to the Fed chairman, the job market is still very tight. He points out that companies are still growing.
In the coming weeks and months, Fed policymakers will be scrutinizing macroeconomic data, Powell said. This raises the possibility that the central bank will not announce another rate hike at its next meeting in June. However, investors are still expecting several hikes this year. Interest rates are now at their highest level in sixteen years. The Fed has raised interest rates in the last ten meetings.
Source: BNR
Sharon Rock is an author and journalist who writes for 24 News Globe. She has a passion for learning about different cultures and understanding the complexities of the world. With a talent for explaining complex global issues in an accessible and engaging way, Sharon has become a respected voice in the field of world news journalism.
