The Fed “is trying to have its cake and eat it too,” said Subadra Rajappa, head of rates strategy at the investment bank Societe Generale. This could lead to slower growth, hiring and inflation, Powell said. Yet he also signaled that the Fed might not need to impose many more increases if more banks were to reduce their lending to conserve cash. The Fed chair also underscored that the central bank remains focused on fighting high inflation, which could require additional rate hikes. “Depositors should assume that their deposits are safe.” “We have the tools to protect depositors when there’s a threat of serious harm to the economy or to the financial system,” Powell said.
WASHINGTON (AP) - The Federal Reserve extended its year-long fight against high inflation Wednesday by raising its key interest rate by a quarter-point despite concerns that higher borrowing rates could worsen the turmoil that has gripped the banking system.Īt a news conference, Fed Chair Jerome Powell sought to reassure Americans that it is safe to leave money in their banks, two weeks after a rush of depositors pulled funds from Silicon Valley Bank, which collapsed in the second-biggest bank failure in U.S.
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