Federal Reserve

Federal Reserve Drops Shocking Announcement

There has been a lot of big announcements recently the Federal Reserve obviously didn’t want to be left out. The financial institution announced it will again raise interest rates.

However, this raise will only be by a quarter of a point as the Federal Reserve grapples with whether another rate increase will help the U.S. economy.

“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 4-3/4 to 5 percent,” the Fed said in their announcement.

Previously the rate was 4-1/2 to 4-3/4 percent.

“Inflation remains well above our longer-run goal of 2%,” Reserve Chairman Jerome Powell said.

Powell further explained that while inflation has “moderated” a bit since last year. However, “pressures continue to run high,” he continued.

“The process of getting inflation back down to 2% has a long way to go and is likely going to be bumpy,” Powell warned.

The central bank has aggressively raised interest rates over the past year. According to ABC News, this move has brought down inflation significantly from its summer peak of last year.

But concerns have been raised since the recent collapse of two U.S. banks – Silicon Valley Bank, then Signature Bank. Questions on whether another rate hike will bring the country closer to a banking crisis increase as the economy remains unstable.

“Our banking system is sound and resilient,” Powell reassured the public Wednesday. He also said that his agency is working with the Treasury Department to strengthen confidence in the banking system.

Earlier this month a study by a team of University researchers indicated that nearly 190 banks are at risk of collapse amid high-interest rates and declining asset values.

The Federal Reserve raised its benchmark interest rate by 4.5% over the past year. This has been the fastest pace of increase since the 1980s.

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