KazPost

Kazakhstan News
Sunday, Jun 04, 2023

US interest rates rise higher despite continued banking turmoil

US interest rates rise higher despite continued banking turmoil

Following the increase, US interest rates stand at 5% to 5.25%, up from 4.75% to 4.5% since the last increase in March. Not since 2007 have they been this high.
The Federal Reserve - the US central bank, known as the Fed - has increased interest rates for the 10th time in a row despite the continued worst banking turmoil since the global financial crash.

The rate has been increased by 0.25 percentage points again in the Fed's continued effort to bring down inflation, which in the US stood at 5% over the 12 months to March - less than half the rate of price rises in the UK.

Despite the fall in price increases, the chair of the Fed, Jerome Powell, said there was a "long way to go" to bring down inflation.

However, he signalled Wednesday's rise may be the last for now as the Fed takes a "data-dependent approach" on future hikes. Economic data, such as the unemployment rate and number of jobs vacancies, will be used to make that decision.

While higher interest rates lead to higher profits for lenders they also put pressure on banks as some government bonds - money lent by investors to a state - lose value.

Those higher interest rates were one of the factors behind the collapse of midsize regional lenders in the US, including Silicon Valley Bank (SVB), Signature Bank, and most recently, First Republic which was bought by JPMorgan Chase before market open on Monday.

First Republic's demise became the second largest bank failure in US history. Markets are on edge after a sell off on Tuesday of US banking shares, a delayed reaction to the fall of First Republic.

But the Fed maintained the US banking system is "sound and resilient".

"Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation," it said.

"The extent of these effects remains uncertain."

Despite banking sector assurances, Mr Powell said strain from the banking system in March, when SVB collapsed, is resulting in even "tighter" financial conditions.

Following Wednesday's increase, US interest rates stand at 5% to 5.25%, up from 4.75% to 4.5% since the last increase in March. Not since 2007 have they been this high.

In the US, the interest rate is a range, rather than a single percentage - unlike the UK - because the Fed is not permitted to set a specific figure. The figures is a target rate set to guide lenders.

Increased interest makes borrowing more expensive, driving up the cost of mortgage payments and credit card debt.

The hike came despite signals the US economy was slowing.

Fears of recession were raised as the world's largest economy slowed sharply in the first three months of the year, the first official estimate said.

Growth was measured at 1.1% between January and March, the Commerce Department said.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

KazPost
Close
0:00
0:00
Nvidia Joins Tech Giants as First Chipmaker to Reach $1 Trillion Valuation
Drone Attack on Moscow's Wealthiest Neighborhoods Suspected to be Launched by Ukraine
Elon Musk Meets Chinese Finance Minister in Beijing
AI ‘extinction’ should be same priority as nuclear war – experts
Prominent Hacker Forum RaidForums Suffers Substantial Data Breach
Nvidia CEO Huang says firms, individuals without AI expertise will be left behind
WPP Revolutionizes Advertising with NVIDIA's AI Powerhouse
Two US Employees Fired For Chasing Robbers Out Of Store As They Broke ''Company Policy''
Pfizer, the EU, and disappearing ink - Smoke, Mirrors, and the Billion-Dose Pfizer Vaccine Deal: EU's 'Open Secret
A provocative study suggests: Left-Wing Extremism and its Unsettling Connection to Psychopathy and Narcissism
Ukrainian Intelligence Official Admits to Assassination Attempts on Putin
Bernard Arnault Loses $11.2 Billion in One Day as Investors Fear Slowdown in US Growth Will Reduce Demand for Luxury Products
Russian’s Wagner Group leader: “I am not a chef, I am a butcher. Russia is in danger of a revolution like in 1917.”
TikTok Sues Montana Over Law Banning the App
Ron DeSantis Jumps Into 2024 Presidential Race, Setting Up Showdown With Trump
Talks between US House Republicans and President Biden's Democratic administration on raising the federal government's $31.4tn debt ceiling have paused
Biden Administration Eyeing High-Profile Visits to China: The Biden Administration is heating things up by looking into setting up a series of top-level visits to Beijing by top officials in the coming months
Debt Ceiling Crises Have Unleashed Political Chaos
Weibao Wang, a former software engineer at Apple, was charged with stealing trade secrets related to autonomous systems, including self-driving cars
Mobile phone giant Vodafone to cut 11,000 jobs globally over three years as new boss says its performance not good enough
Elon Musk compares George Soros to Magneto, the supervillain from the Marvel Comics series.
Warren Buffett Sells TSMC Shares Over Concerns About Taiwan's Stability
New Study Finds That Secondary Bacterial Pneumonia Is a Major Cause of Death in COVID-19 Patients Who Require Ventilator Assistance
King Charles III being crowned.
'Godfather Of AI' Geoffrey Hinton Quits Google To Warn Of The Tech's Dangers
A Real woman
Vermont Man Charged with Stalking After Secretly Tracking Woman with Apple AirTag
Elon Musk Statements About Tesla Autopilot Could Be 'Deepfakes,' Lawyers Claim. Judge Evette Pennypacker Does Not Understand How Far and Advanced This Technology Became
Ukraine More Prepared for Counterattack as Reinforcements Arrive
UK Prime Minister Rishi Sunak and Italian Prime Minister Giorgia Meloni Discuss Migration, Defence, and Ukraine
AT&T's Successful Test of Satellite-Based Phone Call Raises Possibility of Widespread Coverage
CNN: "Joe Biden is asking for four more years — when 74% of Americans think the country is heading the wrong way“
Turkish President Recep Tayyip Erdogan Cuts Short Live TV Interview Due to Health Issue
Pulitzer Prize-winning journalist Seymour Hersh slams New York Times' pro-government stance and treatment of sources
Enough is enough: it's time to end the war in Ukraine. While Russia may be to blame for starting it, Russia is not the one refusing to stop it
Fox News Settles their case with Dominion Voting Systems for a staggering $787.5 MILLION
21-year-old Massachusetts Air National Guard member Jack Teixeira has been arrested for leaking classified Pentagon Documents
The Supreme Court will allow a 12-year-old transgender West Virginia girl to compete on her middle school’s girls' sports teams amid a lawsuit over a ban
Bank of America cuts short conference after outrage at Ukraine comments
Mitt Romney calls Trump indictment 'overreach,' says charges were 'stretched' to suit a 'political agenda'
The G-7 aims to make global crypto regulations tougher
Russia arrested an American reporter for the Wall Street Journal on espionage charges
Don’t Dismiss China’s Peacemaking Bid
China and Brazil have signed a new deal that will allow them to trade in their own currencies, bypassing the US dollar as an intermediary
Elon Musk and Others Call for Pause on A.I., Citing ‘Profound Risks to Society’
“We've had evidence prior to the pandemic that masks were largely ineffective at preventing community transmission of influenza “
Former Starbucks CEO Howard Schultz:
Former Starbucks CEO Howard Schultz rejects being labeled a "billionaire"
Jamie Dimon is being deposed over JPMorgan Chase role in Epstein lawsuits
Brand new security footage has just been released to the public showing the Active shooter Audrey Elizabeth Hale drove to Covenant Church School in her Honda Fit this morning, parked, and shot her way into the building
×