The U.S. Federal Reserve has just announced fresh hikes to take interest rates to the highest levels seen since the eve of the 2008 financial crash.
The Fed hiked its benchmark federal funds rate by a quarter of a percentage point on Wednesday.
The move marks the 10th in a series of hikes that began in March 2022.
The rate hike brings the Fed’s target rate within a range of 5% and 5.25%, with the Fed continuing its series of rate increases.
Most economists anticipated a quarter-point interest rate hike in an effort to bring inflation down.
However, many expect this will be the last rate increase in the series.
According to CNBC, markets were predicting on Wednesday morning an almost 100% odds that the Fed would hike rates by a quarter-point.
With the latest rate increase, the Fed funds rate is now at its highest level since 2007, prior to the 2008 financial crisis.
“What’s most important is how they convey the potential for a pause going forward,” Collin Martin, fixed income strategist at Charles Schwab, told CNBC.
“How do they do that while also probably leaving the door open a little bit?
“That will be a balancing act between suggesting a pause is in the cards but still is dependent on incoming data should inflation turn higher going forward.”
According to Bureau of Economic Analysis (BEA) data, the U.S. economy slowed more than expected to 1.1% in the first quarter of 2023.
Low GDP, high inflation, and rising interest rates added to concerns about the possibility of an upcoming recession, according to The Wall Street Journal.
Meanwhile, a former top Fed official has warned that banking crisis is far worse that most Americans realize.
As Slay News reported, former Federal Reserve Bank of Dallas President Robert Kaplan has warned that the situation is direr than commonly believed and he’s calling the central bank to pause its rate hiking cycle.
In an interview on Bloomberg TV, Kaplan says the Fed must give policymakers more time to address the risks.
He called for the central bank to deliver a so-called “hawkish pause” when it announces its decision on interest rate levels later on Wednesday.
“I’d prefer to do what’s called the hawkish pause, not raise but signal that we are in a tightening stance because I actually think the banking situation may well be more serious than we currently understand,” Kaplan said.