The Fed Hikes Interest Rate by 0.25 Point Despite Global Banking Turmoil
The Federal Reserve increased interest rates for the 9th time in a row in response to the stress in the banking sector.
Fed policymakers raised the rates by 0.25 point to just under 5%, this will cost the people seeking for car loans or have credit card debt.
The Fed's rate-setting committee believes that slightly higher rates are necessary to restore price stability.
Consumer prices are rising at an alarming rate. Annual inflation in February was 6% which was down from 9.1% last June, but still above the Fed's target of 2%.
The rate-setting committee expect the economy will grow by 0.4% this year. They anticipate the unemployment rate will climb to 4.5% from 3.6% in February.
Goldman Sachs stated that a Fed rate hike would be detrimental to its goal of soothing financial strains and assuring Americans banks stability.
A majority of Fed officials suggested that a target Fed funds rate between 4% to 4.75% would work well for 2023. They expect rates to fall between 3% and 4% by 2024.