After the new increase in interest rates, in a context of US banking instability, the FED suggests a pause in the increases.
The Federal Reserve (Fed) of the United States announced on May 3, 2023 a new rise in interest rates, of 0.25 points, which places the rates in a range between 5% and 5.25% per year.
The increase, the tenth in the last year, is in line with what was predicted by analysts and comes in a context of high banking instability.
In the statement, the Fed’s Federal Open Market Committee (FOMC) did not clarify whether this could be the last hike before taking a break due to instability in the banking system .
“In assessing the appropriate monetary policy stance, the committee will continue to monitor the implications of incoming data for the economic outlook ,” the statement stated.
Thus, the FOMC will take into account “the cumulative tightening of monetary policy , the lags with which monetary policy affects economic activity and inflation, and economic and financial factors .”
The Fed is “prepared” to adjust the monetary policy stance “as appropriate” if “risks arise that could prevent the achievement of the objectives” of bringing inflation to 2%, the statement added.
In the statement, the regulator made a brief reference to the banking situation and assured that “the US banking system is solid and resilient.”