US Fed Raises Key Interest Rate By 25 Bps But Hints At  A Pause Amid Banking Crisis

The US Federal Reserve raised its key interest rate once again by 25 basis points (bps) in order to reinforce its fight against inflation. As per reports, this Fed rate hike is also one of the highest in 16 years as the authority navigates tricky waters with the on-going banking crisis and inflation. 

Despite the rate hike initiated on Wednesday, the US Federal Reserve also hinted that it may pause the rate hike cycle after this. However, there is no confirmation of the same. If the Fed resorts to a pause, it would primarily be on the grounds that 10 rate hikes have made borrowing for consumers and businesses more expensive. 

However, the US Federal Reserve Chair Jerome Powell also mentioned that the Fed is yet to decide whether to suspend its rate hike. He even added that the Fed would also continue to monitor the latest economic data in order to decide whether to pause the hikes or not. 

The latest rate hike by US Fed raised the benchmark rate to about 5.1 per cent and experts already anticipate it to increase borrowing costs. Powell also reportedly added, “Inflation pressures continue to run high and the process of getting inflation back down to 2 per cent has a long way to go.”

As per several experts, the US banking crisis, especially with the fall of the Silicon Valley Bank (SVB) worsened the economic situation despite authorities closely monitoring it. With the already existing pressures of inflation and the added banking turmoil, the rate hike(s) by US Fed were expected.