Fed raised interest rates by 25 bps
Since March 2022, the Fed has increased interest rates 9 times. This time, the FOMC, which sets interest rates, voted unanimously to increase interest rates by 25 basis points, which is in line with the estimated target range of 4.75%-5%. Earlier this range used to be at the time of 2008 Global Finance Crisis.

Estimates on rates show that the median estimate for the end of the year 2023 is 5.1%, which is in line with what was given in December. How did the rates reach here, just look at this also, Fed had increased the interest rates by 50 basis points in December, before that it had increased the interest rates by 75 basis points for 4 consecutive times. At the end of the year 2024, the estimate of rates has increased from 4.1% to 4.3% now.

Fed softening tone, a sign of rate cut?
Apart from the increase in interest rates, it is very important to pay attention to the commentary of the Fed. So far the Fed’s language was that the ‘interest rate hike’ will continue, the tone of the Fed was very solid regarding this. But now the tone of the Fed has softened, the Fed says that it may be right to consider some ‘additional policy determination’.

When Jerome Powell was asked by reporters on the Fed’s softening tone, why is it so, is there a rate cut expected this year? So Powell said that the Fed is not expecting any rate cut this year. Our absolute commitment is to stabilize prices, and the evidence shows that people believe we should.

‘If needed, we will increase the rates even further’
Powell clearly said that ‘if the need arises, Fed officials are ready to increase rates even further’. Journalists asked about the current banking crisis, whether there was any talk about it, are you seeing its effect on the policy. Powell told that ‘in view of the current banking crisis, there was also a discussion among policymakers whether interest rate hikes should be curbed, but we agreed only to increase interest rates, because the current data shows that We are sure that the pressure of inflation will continue.

Heavy inflation crisis on banking crisis
This means that no clear answer has been given about when the Fed will stop the increase in interest rates, but the possibility cannot be denied that the Fed will take this decision when the figures are in its favor. As far as the banking crisis is concerned, the crisis of inflation has loomed large on it.

The increase in interest rates and the projections are enough to tell that policymakers are trying hard to bring down inflation below 2%, which has been 6% in February. The Federal Open Market Committee ie FOMC, which sets the interest rates, says that ‘Whether the rates will go ahead in future or not, it cannot be said with certainty right now, everything depends on the data’.

The Fed’s projected rate for the end of 2023 is 5.1%, which is in line with the projections released in December.

In fact, after the banking crisis in the US, the Fed is now trying to strike a balance between financial stability and inflation. Fed’s effort is to send a message to the market that America’s banking system is strong and there is no reason to panic. The Fed said that due to the current banking crisis, credit conditions for households and businesses will tighten, its effect on economic conditions will also be seen, it will also put pressure on hiring and inflation, and it is not certain how much it will affect.

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