Fed Raises Interest Rate but Hints This Could be Last Increase for Now
New York, NY, March 23, 2023-The Federal Reserve approved another quarter-percentage-point interest-rate increase but signaled that banking-system turmoil might end its rate-rise campaign sooner than seemed likely two weeks ago, reports the Wall Street Journal.
As of March 23, The current average interest rate for a 30-year fixed mortgage is 6.85%, down 12 basis points over the last seven days.
“The decision Wednesday marked the Fed’s ninth consecutive rate increase aimed at battling inflation over the past year. It will bring its benchmark federal-funds rate to a range between 4.75% and 5%, the highest level since September 2007,” says the Wall Street Journal.
“Fed Chair Jerome Powell said officials had considered skipping a rate hike after banking stress intensified last week. And he hinted that Wednesday’s increase could be their last one for now depending on the extent of any lending pullback that follows a bank run earlier this month. Regulators shuttered Silicon Valley Bank and a second institution, Signature Bank, two weeks ago, and bailed out uninsured depositors to stave off a panic.
“Estimates of just how much any credit contraction could reduce hiring, economic activity and inflation were ‘rule-of-thumb guesswork, almost, at this point. But we think it’s potentially quite real, and that argues for being alert as we go forward,’ Mr. Powell said at a news conference after the Fed’s policy meeting. Later, he said, ‘it could easily have a significant macroeconomic effect.’”