Latest: Fed raises interest rates 0.25%, escalating inflation fight

Despite the economic turbulence, the central bank appears dedicated to tightening its grip on prices.

The Fed’s 10th consecutive rate increase arrives less than a week after fresh government data showed that U.S. economic growth slowed over the first three months of this year.

The Federal Reserve on Wednesday raised its short-term borrowing rate another 0.25%, escalating the central bank’s attack on inflation just two days after the forced sale of First Republic Bank.

Inflation has fallen significantly from a summer peak though it remains more than double the Fed’s target of 2%.

Speaking in Washington, D.C., on Wednesday,2023 Fed Chair Jerome Powell reasserted the central bank’s commitment to cooling price increases but left open the possibility that the Fed could pause increases at its next meeting.

“Inflation pressures continue to run high,” Powell said.

“Inflation pressures continue to run high,” Powell said. “The process of getting inflation back down to 2% has a long way to go.”

Increases in the Fed’s benchmark interest rate have contributed to the financial emergency facing U.S. banks.

Powell described the omission in the announcement on Wednesday as “meaningful,” saying a decision about any additional rate hikes would be “data dependent.”

As the Fed aggressively hiked interest rates over the past year, the value of long-term Treasury and mortgage bonds dropped, punching a hole in the balance sheets at some banks.

Three of the nation’s 30-largest banks have failed since March

The announcement on Wednesday raises the benchmark rate to a target range of 5% to 5.25%.

“The U.S. banking system is sound and resilient,” the central bank said. “Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation.

The U.S. added 236,000 jobs in March, which marks strong job growth, but lower than the average of 334,000 jobs added each month over the previous six months