The Federal Reserve raised its key interest rate by a quarter-point, despite concerns that higher borrowing rates could worsen the turmoil that has gripped the banking system.
Traders work on the floor of the New York Stock Exchange in New York, on Wednesday, March 22, 2023. News on the Federal Reserve interest rate hike appears on a monitor in the background.
The central bank also signaled that it’s likely nearing the end of its aggressive series of rate hikes. In a statement it issued, it removed language that had previously indicated that it would keep raising rates at upcoming meetings. The statement now says “some additional policy firming may be appropriate” — a weaker commitment to future hikes.
The Fed’s policy decision Wednesday reflects an abrupt shift. Early this month, Powell had told a Senate panel that the Fed was considering raising its rate by a substantial half-point. At the time, hiring and consumer spending had strengthened more than expected, and inflation data had been revised higher.
After the fall of the two banks, Credit Suisse was taken over by UBS. Another struggling bank, First Republic, has received large deposits from its rivals in a show of support, though its share price plunged Monday before stabilizing.
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