The Federal Reserve went forward with another interest rate increase on Wednesday, but seemed to hint that its year-long campaign of rate hikes could soon end in the fallout from the ongoing banking crisis.
The Fed unanimously approved a quarter-point rate hike to bring its benchmark federal-funds rate to between 4.75 and 5 percent, its highest level since September 2007, the Wall Street Journal reported. The increase marked the Fed’s ninth straight rate hike as it seeks to curb inflation.
“The committee anticipates that some additional policy firming may be appropriate,” the Fed’s post-meeting policy statement said. The statement notably did not include a reference to “ongoing increases” which appeared in the Fed’s previous eight statements.
The statement called the U.S. banking system “sound and resilient” but said little about how recent bank collapses will impact the overall economy.
“Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation,” the statement read. “The extent of these effects is uncertain.”
At a news conference Wednesday, Fed chair Jerome Powell elaborated that the committee believes the impact will be “potentially quite real and that argues for being alert as we go forward.”
Powell said officials considered leaving interest rates untouched, but ultimately chose to raise them because inflation remains high.
A reprieve from rate hikes would come as welcome news to the real estate industry as higher interest rates all but stymy investment sales and elevated mortgage rates slow the ohusing market.
— Pat Ralph
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