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The US central bank (Fed) raised its rate by a quarter of a percentage point on Wednesday, seeking to balance its fight against inflation and the turbulence in the banking sector which it warned could risk to “weigh” on the economy. The Fed’s main policy rate is now in a range of 4.75-5.00%, the highest level since 2006, and the institution is planning further hikes.
The Fed warned in a statement that the recent banking crisis was “ susceptible […] weigh on economic activity, hiring and inflation ». « The magnitude of these effects is uncertain “, she pointed out. But savers’ money is safe and the banking system remains sound, assured Fed Chairman Jerome Powell at a press conference, who stressed that the institution is ” determined to learn from the episode ».
Fed officials mostly anticipate additional rate hikes in the coming months, but refer more broadly in the statement to “ additional actions to strengthen the policy without mentioning rates specifically. Despite the difficulties, the possibility of a soft landing for the American economy “ still exists “added Jerome Powell, saying that the Fed” try to find ” The good way.
The powerful American central bank was faced with a difficult decision: to continue raising its main key rate to curb high inflation or to take a break, in order to avoid aggravating the difficulties of the banks, anticipations showing the hesitations of the market on the subject.
Concerns after the bankruptcy of the SVB
The recent bankruptcies of US regional banks Silicon Valley Bank (SVB), Signature Bank and Silvergate have created a wave of concern. Governments, central banks and regulators intervened urgently to try to restore confidence, the best weapon to avoid contagion. “ We need to strengthen supervision and regulation “Banks, conceded Mr. Powell, who recalled that an investigation by regulators is underway and who showed himself in favor of the conduct of an independent investigation.
US Treasury Secretary Janet Yellen assured a Senate committee on Wednesday that “ the American banking system was solid ». « Recent actions by the federal government have demonstrated our strong commitment to taking the necessary steps to ensure the safety of depositors’ savings. “, she added. “ It is important to be clear: the shareholders and creditors of failing banks are not protected by the government. And no loss […] will not be borne by the taxpayer “, also underlined the Minister of Economy and Finance of Joe Biden.
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