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The Federal Reserve hiked interest rates on Wednesday — a pivotal move that showed the central bank’s resolve to tackle inflation despite recent chaos in the US banking sector.
In a hotly anticipated decision, the rate-making Federal Open Market Committee hiked its benchmark rate by 0.25% — to a range of 4.75% to 5% — at the conclusion of the Fed’s closely-watched policy meeting.
“The U.S. banking system is sound and resilient,” the FOMC said in a statement. “Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation.”
The tough call by the Fed — headed by chairman Jerome Powell — had been the subject of fierce debate since Silicon Valley Bank and Signature Bank of New York collapsed in the largest US bank failures since the 2008 financial crisis.
Hedge fund boss Bill Ackman and tech billionaire Elon Musk were among those calling for the Fed to pause hikes – or even cut rates – to avoid more shocks to the economy.
