On Wednesday, the Federal Open Market Committee (FOMC) decided in a unanimous vote to raise the guidance for its fed funds rate to 4.75%-5.00% from 4.50%-4.75%, a raise of 25 basis points (0.25%). This is the highest level for the fed’s benchmark since September 2007.
Hard to believe but two weeks ago, most people outside the financial world did not know a certain California bank even existed.
Fed Chair Jerome Powell spoke to the imbalance in testimony before the Senate on Tuesday, saying that the central bank could raise rates higher and potentially faster than previously thought should economic data continue to come in strong.
A gauge of manufacturing improved for the first time in six months, though activity remained in contraction territory amid fragile demand and growing inflationary pressures. The Institute for Supply Management’s gauge of factory activity ticked up to 47.7 in February from the weakest print since May 2020.
US consumer prices rose briskly at the start of the year, a sign of persistent inflationary pressures that could push the Federal Reserve to raise interest rates even higher than previously expected.
With the latest Federal Open Market Committee meeting now in the past, Fed governors are free to speak their minds on the economy and policy. At the Economic Club of Washington on Tuesday, Fed Chairman Jerome Powell did just that.