The Federal Reserve raised its benchmark interest rate by 25 basis points, defying expectations that it may halt its rate-hiking campaign due to concerns about the U.S. banking sector.
The unanimous decision by the Fed's Board of Governors marks the ninth consecutive rate hike for the U.S. central bank.
- The benchmark federal funds rate is now 4.75-5%, its highest mark since September 2007.
- The
Federal Open Markets Committee (FOMC) did not mention "ongoing
increases" in interest rates in its statement, which could indicate that
policymakers are considering leaving borrowing costs steady at their
next meeting.
- Projections
now estimate that the Fed funds rate will peak at 5.1%, indicating that
most Fed officials expect one more rate hike before a pause.
- The
median forward-looking projection from Fed officials expects rates to
fall by 0.8 percentage points in 2024 and 1.2 percentage points in 2025.
- The FOMC policy statement
said that the "U.S. banking system is sound and resilient" while
indicating that the recent collapse of two mid-size banks could "weigh
on economic activity, hiring, and inflation."
- Goldman Sachs analysts had expected the Federal Reserve to pause its interest rate hiking campaign due to concerns about risks to the U.S. banking system.
