The US Federal Reserve has raised interest rates again by 0.25 percentage points in the midst of the current banking crisis. The interest margin is now between 4.75 and 5.0 percent, the highest level since 2006, as the Federal Reserve (Fed) announced on Wednesday in Washington. She also warned that the current banking turmoil is likely to have an impact on the economy.
“The US banking system is healthy and resilient,” the Fed said. However, recent developments are likely to limit household and corporate lending and affect economic activity, hiring and inflation. “The extent of this impact is uncertain,” the Fed said.
Ninth increase in twelve months
In the fight against high inflation, the Fed had raised interest rates eight times in the past twelve months. Some analysts had expected the central bank to pause on rate hikes amid the turmoil in financial markets following the Silicon Valley Bank (SVB) default.
The investment bank Goldman Sachs explained that the markets were not yet convinced that the previous aid measures in the fight against the banking crisis were sufficient to support small and medium-sized banks. The Fed is therefore likely to “take a break in the fight against inflation”.
However, the Fed continued to raise interest rates. The inflation rate in the USA was recently six percent and thus well above the target of two percent.
The collapse of California’s Silicon Valley Bank almost two weeks ago caused considerable turbulence in the banking sector and on the stock exchanges. A number of other banks in the US and Europe have since run into trouble. In the USA, the banks First Republic and PacWest Bancorp are among those affected. In Switzerland, it hit the big bank Credit Suisse, which has since been bought by its competitor UBS. (AFP)
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