04/13/2023
the Economists at the Federal Reserve (the Fed, the US central bank) predicted a “minor recession” When its authorities decided to raise interest rates in March, according to excerpts from the minutes of the monetary policy meeting that were published yesterday.
The minutes note that “the (technical) team’s expectations at the time of the March meeting included a slight recession later in the year, with a recovery in the following two years.”
On March 22, despite this assessment by his teams of economists, the The WMO Monetary Committee raised interest rates for the ninth consecutive timein the midst of a crisis affecting regional banks.
The increase was a quarter of a percentage point to bring their benchmark rates to between 5% to 5.25% annually.
Participants in the committee meeting agreed Banking problems would “probably” lead to a tightening of credit conditions for homes and businesses.
Although the decision to raise interest rates was unanimous among the voting members of this monetary policy body, “many participants” emphasized that they questioned whether it was inappropriate to maintain rates on that occasion.
They indicated that it might be an opportunity to take “more time” to assess the financial and economic repercussions of the banking crisis.
Three regional US banks, starting with a tech-focused California SVB, failed in March.Deposits fled as their asset values fell and customers withdrew their money amid rising interest rates.
the The next monetary policy meeting of the Federal Reserve will be held on May 2-3.
The level of inflation was “unacceptable” for Fed members, according to the minutes of their latest meeting, held with the latest data on consumer prices rising 6% over a 12-month period.
yesterday, A 12-month measure of inflation indicated a moderate increase of 5%. Within a year, though, it’s far from the 2% the central bank aspires to.
Along these lines, Columbia Economic Analysts explained that according to the minutes of the recent Fed meeting, “several FOMC members indicated that the potential effects of recent developments in the banking sector on economic activity and inflation have prompted them to reduce their expectations about a rate range. interest that should be sufficiently restricted.”
While all the members who voted at this meeting supported a rate hike, it was noted that many officials were less committed to another increase in May because they want to assess the impact of banking pressure on the economy.
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