Jay Powell Said the Banking System is “Sound and Resilient.” Now More Banks Are in Trouble.

May 04, 2023

by Ryan McMaken Mises.org

The Federal Reserve’s Federal Open Market Committee (FOMC) on Wednesday raised the target policy interest rate (the federal funds rate) to 5.25 percent, an increase of 25 basis points. With this latest increase, the target has increased 5 percent since February 2022. This is the highest rate reached since August 2007, shortly before a recession began in December of that year.

With an increase of only 25 basis points, the May meeting is the third month in a row during which the Fed has pulled back from its more substantial rate hikes of 2022. After four 75-basis-point increases in 2022, the committee approved a 50-point increase in December, followed by 25-point increases in February and March, and another on Wednesday.