The US Federal Reserve raised its interest rates by a quarter of a percentage point for a 10th&nbsp;consecutive time on Wednesday (May 3), while indicating a pause in further increases. This comes amid recent bank failures as well as Congress’ ongoing deadlock over the debt ceiling issue.&nbsp;

The central bank has been aggressively raising interest rates since March last year in a bid to control the US’ soaring inflation and pushed its benchmark overnight interest rate somewhere in the 5.00 per cent and 5.25 per cent range. In the statement, the Fed also said that it would “take into account” the impact of tighter monetary policy and “economic and financial developments” going forward.

During the press conference, Fed Chair Jerome Powell said that the central bank still views inflation as too high and that it remains concerned by high price pressures. However, it no longer “anticipates” further hikes and monitors the incoming data to make the decision if more hikes “may be appropriate.”

Therefore, Powell has said that it is too soon to say if the rate-hike cycle is over as the decisions made by officials are taking on a “meeting-by-meeting” basis, adding, “we are prepared to do more&nbsp;with rate rises if needed.”&nbsp;

The decision about the recent hike came after the policy-setting Federal Open Market Committee’s (FOMC) recent meeting and was in line with the expectations of analysts and traders.&nbsp;

Notably, the recent statement by the central bank marks a departure from the last rate announcement where policymakers had said that they expect “additional policy firming” to rein in inflation. This time around, the Fed’s ease of guidance suggests that the economy is somewhat beginning to cool.&nbsp;

“If you add up all the tightening that's going on through various channels, we feel like we're getting close or are maybe even there,” said Powell, as quoted by Reuters, about monetary policy. The Fed chair also pushed back on market expectations of rate cuts this year adding, “We on the committee have a view that inflation is going to come down not so quickly, it will take some time.”&nbsp;

It is worth noting that the Fed’s policy rate, this time around, is somewhat close to where it was on the eve of the 2008 financial crisis. The rate hikes have more than doubled mortgage rates, elevated the costs of auto loans, credit card borrowing and business loans and heightened the risk of a recession, reported The Associated Press.&nbsp;

(With inputs from agencies)&nbsp; 
 
 
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The US Federal Reserve raised its interest rates by a quarter of a percentage point for a 10th consecutive time on Wednesday (May 3), while indicating a pause in further increases.

The US Federal Reserve raised its interest rates by a quarter of a percentage point for a 10th consecutive time on Wednesday (May 3), while indicating a pause in further increases. This comes amid recent bank failures as well as Congress’ ongoing deadlock over the debt ceiling issue. The central bank has been aggressively raising interest rates since March last year in a bid to control the US’ soaring inflation and pushed its benchmark overnight interest rate somewhere in the 5.00 per cent and 5.25 per cent range. In the statement, the Fed also said that it would “take into account” the impact of tighter monetary policy and “economic and financial developments” going forward. During the press conference, Fed Chair Jerome Powell said that the central bank still views inflation as too high and that it remains concerned by high price pressures. However, it no longer “anticipates” further hikes and monitors the incoming data to make the decision if more hikes “may be appropriate.” Therefore, Powell has said that it is too soon to say if the rate-hike cycle is over as the decisions made by officials are taking on a “meeting-by-meeting” basis, adding, “we are prepared to do more with rate rises if needed.” The decision about the recent hike came after the policy-setting Federal Open Market Committee’s (FOMC) recent meeting and was in line with the expectations of analysts and traders. Notably, the recent statement by the central bank marks a departure from the last rate announcement where policymakers had said that they expect “additional policy firming” to rein in inflation. This time around, the Fed’s ease of guidance suggests that the economy is somewhat beginning to cool. “If you add up all the tightening that's going on through various channels, we feel like we're getting close or are maybe even there,” said Powell, as quoted by Reuters, about monetary policy. The Fed chair also pushed back on market expectations of rate cuts this year adding, “We on the committee have a view that inflation is going to come down not so quickly, it will take some time.” It is worth noting that the Fed’s policy rate, this time around, is somewhat close to where it was on the eve of the 2008 financial crisis. The rate hikes have more than doubled mortgage rates, elevated the costs of auto loans, credit card borrowing and business loans and heightened the risk of a recession, reported The Associated Press. (With inputs from agencies) WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

US Federal Reserve announces quarter-point interest rate hike, signals potential pause

The US Federal Reserve raised its benchmark lending rate on Wednesday, as it sought to strike a balance between curbing high inflation and averting further upheaval in the commercial banking sector.

The quarter-point increase, which was in line with expectations, lifts the target range to 4.75-5.00 per cent at the end of a two-day policy meeting.

In a statement, the Fed said recent banking sector developments "are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring and inflation."

The policy-setting Federal Open Market Committee (FOMC) added that "some additional policy firming may be appropriate" to get to a stance that is sufficiently restrictive to bring inflation down.

The latest increase was the same size as the central bank's previous rate decision in February.&nbsp;It comes after two weeks of market turmoil following the collapse of three regional lenders.

Wednesday's decision underscores the Fed's determination to tackle inflation, which remains stubbornly above policymakers' long-term annual target of two per cent despite an effort to lower price increases.

<h2>Hot data and banking uncertainty</h2>

The implosions of Silicon Valley Bank (SVB) and two other regional lenders pummelled banking stocks around the world last week, with Swiss investment bank Credit Suisse swallowed up by regional rival UBS after its shares sank to a record low.

Asian stock markets and most European indices rose ahead of the Fed's decision. Wall Street stocks picked up shortly after the Fed's announcement.

The combination of hot US economic data at the start of the year and uncertainty in the banking sector has led most analysts to predict the Fed will continue with a more modest hiking cycle than was previously expected.

"After the recent news, the recent developments in the financial markets, we now see a kind of risk to both sides," Stephen Juneau, senior US economist at Bank of America Global Research, told AFP ahead of the decision.

<h2>More 'dovish' language</h2>

Treasury Secretary Janet Yellen said Tuesday that the US banking sector was "stabilising" after authorities stepped in to protect deposits following the failures of SVB and Signature Bank.

But she conceded that "similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion."

Yellen's comments underscored this week's relief rally in the stock markets, along with actions by the Fed and other major central banks to improve lenders' access to liquidity.&nbsp;

On Wednesday, the Fed also updated its economic projections, slightly lowering its 2023 GDP growth projections 2023 to 0.4 per cent from 0.5 per cent in December.

Median projections for the Fed's benchmark rate at the end of this year were unchanged, while inflation expectations rose increased slightly.

The Fed's announcement follows on the heels of the European Central Bank's decision last week to raise rates by 0.5 percentage points.

ECB chief Christine Lagarde warned on Wednesday that the Eurozone's monetary policymakers "will still have ground to cover to make sure that inflation pressures are stamped out."&nbsp;

She said the recent banking turmoil could add to "downside risks" in the single currency area.

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The US Federal Reserve raised its benchmark lending rate on Wednesday, as it sought to strike a balance between curbing high inflation and averting further upheaval in the commercial banking sector.

The US Federal Reserve raised its benchmark lending rate on Wednesday, as it sought to strike a balance between curbing high inflation and averting further upheaval in the commercial banking sector. The quarter-point increase, which was in line with expectations, lifts the target range to 4.75-5.00 per cent at the end of a two-day policy meeting. In a statement, the Fed said recent banking sector developments "are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring and inflation." The policy-setting Federal Open Market Committee (FOMC) added that "some additional policy firming may be appropriate" to get to a stance that is sufficiently restrictive to bring inflation down. The latest increase was the same size as the central bank's previous rate decision in February. It comes after two weeks of market turmoil following the collapse of three regional lenders. Wednesday's decision underscores the Fed's determination to tackle inflation, which remains stubbornly above policymakers' long-term annual target of two per cent despite an effort to lower price increases. Hot data and banking uncertainty The implosions of Silicon Valley Bank (SVB) and two other regional lenders pummelled banking stocks around the world last week, with Swiss investment bank Credit Suisse swallowed up by regional rival UBS after its shares sank to a record low. Asian stock markets and most European indices rose ahead of the Fed's decision. Wall Street stocks picked up shortly after the Fed's announcement. The combination of hot US economic data at the start of the year and uncertainty in the banking sector has led most analysts to predict the Fed will continue with a more modest hiking cycle than was previously expected. "After the recent news, the recent developments in the financial markets, we now see a kind of risk to both sides," Stephen Juneau, senior US economist at Bank of America Global Research, told AFP ahead of the decision. More 'dovish' language Treasury Secretary Janet Yellen said Tuesday that the US banking sector was "stabilising" after authorities stepped in to protect deposits following the failures of SVB and Signature Bank. But she conceded that "similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion." Yellen's comments underscored this week's relief rally in the stock markets, along with actions by the Fed and other major central banks to improve lenders' access to liquidity. On Wednesday, the Fed also updated its economic projections, slightly lowering its 2023 GDP growth projections 2023 to 0.4 per cent from 0.5 per cent in December. Median projections for the Fed's benchmark rate at the end of this year were unchanged, while inflation expectations rose increased slightly. The Fed's announcement follows on the heels of the European Central Bank's decision last week to raise rates by 0.5 percentage points. ECB chief Christine Lagarde warned on Wednesday that the Eurozone's monetary policymakers "will still have ground to cover to make sure that inflation pressures are stamped out." She said the recent banking turmoil could add to "downside risks" in the single currency area. WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

US Fed delivers 25 points rate hike amid global banking turmoil

Banking major Goldman Sachs has cut the GDP forecast for the US for 2023, anticipating an aggressive rate hike from the Federal Reserve. Reportedly, the GDP growth will see a decline of 0.

Banking major Goldman Sachs has cut the GDP forecast for the US for 2023, anticipating an aggressive rate hike from the Federal Reserve. Reportedly, the GDP growth will see a decline of 0.4 per cent to 1.1 per cent from the earlier projection of 1.5 per cent. Meanwhile, the projection for 2022 was left unchanged at zero per cent. Furthermore, the financial firm expects the US central bank, the Federal Reserve to hike policy rates by 75 basis points in its next meeting. “This higher rates path combined with recent tightening in financial conditions implies a somewhat worse outlook for growth and employment next year,” said the company. Read more: Goldman Sachs to start firing employees from next week amid economic slowdown “Our growth forecast is slightly below consensus and implies a below-potential growth trajectory that we believe is necessary to cool wage and price inflation.” it further added. The firm also believes that the unemployment rate will skyrocket to 4.1 per cent by the end of 2023, up 0.3 per cent from the previous forecast of 3.8 per cent. As reported extensively by WION, the US has already seen two consecutive quarters where the economy has contracted; meaning, an unofficial recession has already set in place. The worries were compounded earlier this week when the Consumer Price Index report was released. The inflation rate stood at a worse-than-expected mark of '8.3' per cent, leading industry experts to predict that the Fed may hike interest rates for a record fifth time this year, next week. Read more: Biden parties as stock market tumbles, inflation worsens and Fed indicates rate hike Moreover, as soon as the report came out, the US stock market tumbled to its two-month low. Reportedly, all three major US stock indices fell well below their numbers set in the month of June. The Dow dropped 139. 40 points to close at 30,822 while S&P 500 closed the week by siding 0.72 per cent. Lastly, Nasdaq Composite slide 0.9 per cent to finish the week at 11,448. Read more: As recession fears mount, Wall Street tumbles to a two-month low (With inputs from agencies) WATCH WION LIVE HERE:

Goldman Sachs slices US GDP forecast; predicts fed hike and rise in unemployment

Continuing its longest streak of total job growth on record, the United States added 156,000 jobs in September.&nbsp;

According to Labour department data released on Friday, after strong job creation in the summer months, the recent numbers were weaker than expected.&nbsp;

The monthly totals had surpassed more than a quarter million jobs in June and July. Analysts had forecast 176,000 positions to be added in the month of September.&nbsp;

The unemployment rate also rose slightly by 0.1 per cent to five per cent, with 7.9 million people counted as unemployed.&nbsp;

The data which is closely monitored by US policymakers is likely to fuel divisions among members of the US Federal Reserve on whether to raise interest rates in the near future.&nbsp;

Most of the hiring have been noted in the business and professional services sector, that added 67,000 jobs. Healthcare positions also grew by 33,000 while restaurants, caterers and bars added 30,000 new positions.

Chairman of the Council of Economic Advisors, Jason Furman, said in a statement that the US businesses have consistently grown since early 2010. However he felt, more work still remains to be done to sustain faster wage growth.

(WION with inputs from agencies) 
&nbsp;

US Labour department data showed weaker-than-expected job creation in September, adding 156,000 positions

Continuing its longest streak of total job growth on record, the United States added 156,000 jobs in September. According to Labour department data released on Friday, after strong job creation in the summer months, the recent numbers were weaker than expected. The monthly totals had surpassed more than a quarter million jobs in June and July. Analysts had forecast 176,000 positions to be added in the month of September. The unemployment rate also rose slightly by 0.1 per cent to five per cent, with 7.9 million people counted as unemployed. The data which is closely monitored by US policymakers is likely to fuel divisions among members of the US Federal Reserve on whether to raise interest rates in the near future. Most of the hiring have been noted in the business and professional services sector, that added 67,000 jobs. Healthcare positions also grew by 33,000 while restaurants, caterers and bars added 30,000 new positions. Chairman of the Council of Economic Advisors, Jason Furman, said in a statement that the US businesses have consistently grown since early 2010. However he felt, more work still remains to be done to sustain faster wage growth. (WION with inputs from agencies)

US unemployment at five per cent after lacklustre jobs growth in September

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US Federal Reserve announces quarter-point interest rate hike, signals potential pause

US Fed delivers 25 points rate hike amid global banking turmoil

Goldman Sachs slices US GDP forecast; predicts fed hike and rise in unemployment

US unemployment at five per cent after lacklustre jobs growth in September