Federal Reserve Hikes Interest Rate Despite Bank Turmoil

By FOX45
Posted on 03/23/23 | News Source: FOX45

The Federal Reserve raised interest rates for the ninth time to the highest levels for federal funds rates since 2007. This is a move to help curb inflation amid the collapse of two U.S. banks.

Director of General Economics and Trade at the Cato Institute Scott Lincicome joined The National Desk’s Jan Jeffcoat to discuss.

“It just got tougher because the banks are going to be tightening credit conditions already but the Fed is still worried about inflation,” he said. “Investors are going to be struggling with the same type of uncertainty the Fed is struggling with trying to balance that inflation-fighting with not causing the economy to really seize up and tip us into a deep recession.”

The Federal Reserve hiked interest rates on Wednesday by a quarter percentage point as many economists predicted.

Lincicome also touched on the banking system, saying, “the bank situation seems to be stabilizing a bit in part because of some pretty major actions by both the Fed and the Treasury Department, effectively guaranteeing that folks will be made whole.” He says the bigger question is really what the long-term situation is with these banks.