Fed Hikes Rates by a Quarter Percentage Point Despite Recent Bank Failures

The US central bank suggests that interest-rate increases may come to an end sooner than previously predicted

Federal Reserve Board Chair Jerome Powell speaks during a news conference in Washington, on Feb. 1, 2023. Saul Loeb/AFP via Getty Images

The Federal Reserve raised interest rates by 25 basis points, lifting the benchmark federal funds rate to a range of 4.75–5.0 percent, the highest since late 2007. This is the ninth consecutive rate increase by the Fed in the past year to combat inflation.

Fed officials say that the banking system is “sound and resilient” and that the recent developments “are likely to result in tighter conditions for households and businesses,” which could weigh on economic activity, hiring, and inflation levels.