Since the collapse of the two major banks, The Federal Reserve has raised its interest rate by .25% for the ninth straight time in a row.
The fed policymakers have voted unanimously to raise the rate by just 5%, making it expensive for borrowers to pull out loans and balances on their credit cards. Consumers are continuing to hurt from their pockets as the prices go up in all sectors of the economy.
Following the collapse of Silicon Valley Bank and Signature Bank this month, some observers had urged the central bank to pause the rate hikes, according to NPR.
“The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy,” said in a statement by The Federal Reserve in their objective to achieve a return to 2%.
Despite the collapse of the major institution, the central bank reassured the stability of the banking system. It was seen was a possible contribution to the increase of the interest rate, according to The Hill.
“Our banking system is sound and resilient with strong capital and liquidity,” Fed Chair Jerome Powell in his address to reporters on Wednesday. “We are committed to learning lessons from this episode, and to work to prevent events like this from happening again.”
The job market continues to have robust growth in recent months while the unemployment rate continues to be low at 3.6%, according to the Department of Labor Statistics. In a further statement from The Federal Reserve, the modest growth has been seen in spending and production.
The Fed Committee is continuing to monitor incoming information regarding the economic outlook as it is prepared to take a stance on monetary policy.
U.S. Senate Majority Leader Chuck Schumer express his concerns about the central bank’s decision to increase the interest rate by a quarter-percent.
“There are competing equities on both sides,” said Schumer. “I will say I am concerned about its effect on the economy.”
The Federal Reserve has continued to commit to its commitment to its goal to return to 2% as the addition policy forming may be appropriate to attain a stance on monetary policy.
The Biden Administration stated that they remained confident in the banking system despite the collapse of Silicon Valley Bank.
“I do believe we have a very strong and resilient banking system and all of us need to shore up the confidence of depositors that that’s the case,” Treasury Secretary Janet Yellen said previously on Tuesday, according to CNN.
The White House has stated and stood firm that The Fed makes the decisions when it came to monetary decisions.
“The Fed is indeed independent. We want to give them the space to make those monetary decisions and I don’t want to get ahead of that,” Karine Jean-Pierre said in a statement in a White House briefing on Tuesday. “I don’t even want to give any thoughts to what Jerome Powell might say tomorrow.”
The Fed Committee will continue to reduce its securities as planned. They are considering that includes information on the labor market conditions, inflation pressures and expectations, and financial & international developments.
