Federal Reserve Raises Interest Rates 25bps For 10th Consecutive Time

Key Points:

• Federal Reserve raises interest rates by 25 basis points for the 10th consecutive time.
• The Fed prioritizes fighting inflation over the banking crisis.
• Interest rate hikes may pause at the next FOMC meeting.

The Federal Reserve raises interest rates by 25 basis points, marking the 10th consecutive increase. Despite calls to halt hikes, the Fed fights inflation, pushing rates past 5%.

The Federal Reserve has again made headlines by raising interest rates by 25 basis points. This decision was expected by many, as the Fed has been actively combating increasing inflation rates for the past ten years. This marks the 10th consecutive increase in a single year, with the potential for an end to the rise on the horizon.

Despite the current banking crisis in the US and calls to halt interest rate hikes, the Federal Reserve is still prioritizing its fight against inflation. As a result, interest rates have risen above the 5% mark, potentially negatively impacting the housing and job markets.

“The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation.”

Stated in FOMC statement

While the job market has long been a source of data suggesting that interest rate hikes should continue, the market could negatively react to this increase above 5% amidst concerns about inflation and the banking industry.

After the highly anticipated May FOMC meeting, the Federal Reserve raised interest rates by another 25 basis points. With attention to whether a continued fight against inflation would commence based on economic data, the market’s reaction to these rate increases remains to be seen.

Despite the banking crisis in the US, the Federal Reserve is still prioritizing its fight against inflation, despite calls to halt interest rate hikes. This comes as the banking sector faces a crisis, with the US government seizing First Republic Bank, the third bank to meet such a fate.

The Federal Reserve aims to reduce inflation to a 2% target, but doing so has become more complex due to various macroeconomic factors. The Fed is expected to carefully evaluate whether or not to pause interest rate hikes at its next meeting, considering inflation rates, economic growth, and the conditions of the job and housing markets.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Thana

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