Federal Reserve Raises Interest Rates by 25bps

The Federal Reserve raised interest rates by another 25 basis points after its two-day policy meeting. Also, many people thought the interest rates would go up, and some thought there would be a break after the May meeting. 

The Fed has fought against rising inflation rates to a level it hasn’t been at in a long time. So, today’s quarter-point increase is the 10th increase in a row in a single year, and the possibility that the increases will stop is at a fever pitch.

Inflation Battle Continues at Federal Reserve

All eyes were on the May Federal Open Market Committee (FOMC) meeting because the US banking situation worsened. So, based on present economic data, the question of whether or not the fight against inflation would continue was an undeniable focal point.

Now, it has come out that the Federal Reserve has raised interest rates by another 25 basis points. Also, people thought the FOMC would raise its base policy rate to a new goal range of 5 to 5.25 percent, the highest level since 2007. 

The news comes after the US government took over First Republic Bank, making it the third bank to be taken over in this way. Also, the situation in the banking industry has led many people to ask for an end to interest rate hikes. But the Fed is putting the fight against inflation first. 

Rates went over 5% because of the increase in interest rates, which could hurt the home and job markets. So, for a long time, data from the job market has shown that interest rates should keep going up. On the other hand, a rise above 5% could hurt the market because of worries about inflation and banks. 

The Fed is still trying to bring inflation down to its goal of 2%. But since many global factors are at play, it gets harder to find that number. At its next meeting, the Federal Reserve is expected to think about stopping rate hikes for a while.