Federal Reserve raises rates by 25bps despite banking stress

Warns of tighter credit conditions

Valeria Martinez
clock • 2 min read

The US Federal Reserve raised interest rates by 25 basis points to a range of 4.75% to 5% on Wednesday (22 March), despite the ongoing turmoil and volatility in the banking sector.

In a statement, the Fed said that while the US banking system is "sound and resilient", recent developments are likely to result in tighter credit conditions for households and businesses and weigh on economic activity, hiring and inflation.  While the impact of this is "uncertain", the Federal Open Market Committee said it remains "highly attentive" to inflation risks, which remain "elevated".  US inflation slows to 6% in February Chair Jerome Powell has repeatedly said inflation control has always been the main objective for the Fed. Prices rose at an annual rate of 6% in Febr...

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