The Federal Reserve increased its benchmark short-term interest rate by a quarterly point on Wednesday, continuing its robust fight against inflation in the face of market volatility following Silicon Valley Bank’s (SVB) failure.
Notwithstanding the Silicon Valley Bank issue. The Federal Reserve will hike rates again for four reasons, but not for the 2023 banking catastrophe.
On the other hand, analysts disagreed on what the Federal Reserve would do. Most experts predicted regulators would raise the federal Reserve funds rate by a qtr point.
But compared to earlier projections of 3.1 percent. The Federal Reserve’s preferred measure of yearly inflation is now anticipate to fall from 5.4 percent in Jan to 3.3 percent by year’s end. Next year, i Inflation is anticipate to reach 2.5 percent.
When failing tech companies started taking money out of Silicon Valley Bank for funding requirements. The bank was forced to sell bonds that had losing value due to the Fed’s abrupt rate increases.
“How could this happen?” was the question we kept asking ourselves over the 1st week.” Powell informed the press.