Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

US interest rates rise higher despite continued banking turmoil

US interest rates rise higher despite continued banking turmoil

Following the increase, US interest rates stand at 5% to 5.25%, up from 4.75% to 4.5% since the last increase in March. Not since 2007 have they been this high.
The Federal Reserve - the US central bank, known as the Fed - has increased interest rates for the 10th time in a row despite the continued worst banking turmoil since the global financial crash.

The rate has been increased by 0.25 percentage points again in the Fed's continued effort to bring down inflation, which in the US stood at 5% over the 12 months to March - less than half the rate of price rises in the UK.

Despite the fall in price increases, the chair of the Fed, Jerome Powell, said there was a "long way to go" to bring down inflation.

However, he signalled Wednesday's rise may be the last for now as the Fed takes a "data-dependent approach" on future hikes. Economic data, such as the unemployment rate and number of jobs vacancies, will be used to make that decision.

While higher interest rates lead to higher profits for lenders they also put pressure on banks as some government bonds - money lent by investors to a state - lose value.

Those higher interest rates were one of the factors behind the collapse of midsize regional lenders in the US, including Silicon Valley Bank (SVB), Signature Bank, and most recently, First Republic which was bought by JPMorgan Chase before market open on Monday.

First Republic's demise became the second largest bank failure in US history. Markets are on edge after a sell off on Tuesday of US banking shares, a delayed reaction to the fall of First Republic.

But the Fed maintained the US banking system is "sound and resilient".

"Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation," it said.

"The extent of these effects remains uncertain."

Despite banking sector assurances, Mr Powell said strain from the banking system in March, when SVB collapsed, is resulting in even "tighter" financial conditions.

Following Wednesday's increase, US interest rates stand at 5% to 5.25%, up from 4.75% to 4.5% since the last increase in March. Not since 2007 have they been this high.

In the US, the interest rate is a range, rather than a single percentage - unlike the UK - because the Fed is not permitted to set a specific figure. The figures is a target rate set to guide lenders.

Increased interest makes borrowing more expensive, driving up the cost of mortgage payments and credit card debt.

The hike came despite signals the US economy was slowing.

Fears of recession were raised as the world's largest economy slowed sharply in the first three months of the year, the first official estimate said.

Growth was measured at 1.1% between January and March, the Commerce Department said.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
Italy Faces Population Decline Amid Youth Emigration
Trump Accuses China of Violating Trade Agreement
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Russia Accuses Serbia of Supplying Arms to Ukraine
Gerry Adams Wins Libel Case Against BBC
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
EU Majority Demands Hungary Reverse Anti-LGBTQ+ Laws
Top Hotel Picks for 2025 Stays in Budapest Revealed
Iron Maiden Unveils 2025 Tour Setlist in Budapest
Chinese Film Week Opens in Budapest to Promote Cultural Exchange
Budapest Airport Launches Direct Flights to Shymkent
Von der Leyen Denies Urging EU Officials to Skip Budapest Pride
Alcaraz and Sinner Advance with Convincing Wins at Roland Garros
EU Ministers Lack Consensus on Sanctioning Hungary Over Rule of Law
EU Nations Urge Action Against Hungary's Pride Parade Ban
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
U.S. Considers Withdrawing Troops from Europe
Russia Deploys Motorbike Squads in Ukraine Conflict
Critics Accuse European Court of Human Rights of Overreach
Spain Proposes 100% Tax on Non-EU Holiday Home Purchases
German Intelligence Labels AfD as Far-Right Extremist
Geert Wilders Threatens Dutch Coalition Over Migration Policy
Hungary Faces Multiple Challenges Amid EU Tensions and Political Shifts
Denmark Increases Retirement Age to 70, Setting a European Precedent
Any trade deal with US must be based on respect not threats', says EU commissioner
UK Leads in Remote Work Adoption, Averaging 1.8 Days a Week
Thirteen Killed in Russian Attacks Across Ukraine
High-Profile Incidents and Political Developments Dominate Global News
Netanyahu Accuses Western Leaders of 'Emboldening Hamas'
Ukraine and Russia Conduct Largest Prisoner Exchange of the War
×