The Federal Reserve is discussing a new interest rate hike with its eyes on banks

the US Federal Reserve (Fed) Tuesday’s meeting began to decide whether to continue raising interest rates to contain inflation, in the context of high banking instability after a new critical episode led by the Bank. The first republic.

Chairman of the Federal Reserve, Jerome Powell He will report tomorrow, Wednesday, on the decision, which, according to analysts, will mean a A rise of 25 basis points would put interest rates in a range of 5% to 5.25%.

If confirmed, that would be it x height One of the consecutive rates since the regulator began the series of increases in March 2022 and may be the last before taking a break, given the instability of the banking system.

“Given concerns about financial stability, the Fed is likely to pause following its decision in May,” Chief Investment Officer Chief Economist said in a recent report. Hermes Union, Silvia D’Angelo.

His estimate is for a rise of 0.25 percentage point, the same as the chief economist of AXA M, Jill Moek.

“We expect a final preemptive rise in 25 base pointss, but the real debate in the coming months will be How much time We’ll have to maintain this stance,” he noted in another recent comment.

speech Powell It will therefore be necessary, says Möec, to see if the Fed “commits not to raise interest rates again” or “if it limits itself to declaring that it will continue to rely on data”, as it has done so far.

At their previous meeting, in March, members of the Federal Reserve’s Federal Open Market Committee (FOMC, for short) decided to raise interest rates by only a quarter of a point, given the uncertainty triggered by the Fed’s bankruptcy. Silicon Valley Bank (SVB), signature bank and rescue of the First Republic.

Although the reasons for the bankruptcy are extensive, the investigation into what happened indicates that its financial situation worsened due to the agency’s monetary policy.

After announcing the March decision, Powell And he announced at the press conference that increases in interest rates after these events may not be sufficient to contain inflation and that An additional package policy may be appropriate.

Although the country’s major economic leaders, including Powell, insisted in recent weeks that the situation would not lead to a financial crisis, the markets fluctuated again last week due to sharp declines in the bank’s stock market. The first republic.

Once again the crisis was contained after the Bank of America c. B. Morgan Chase It announced the purchase of the entity, but nothing guarantees that new critical episodes will not arrive in the banking sector.

However, the feed it Stay clear about the purpose of Return inflation to 2%. According to the latest data on this indicator, the annual rate continued to decline in March for the ninth consecutive month, and settled at 5%, one point lower than the February rate.

This was the largest decline since the index began declining in July 2022, a fact that could indicate that raising interest rates may have the desired effect.

It is also reflected in the latest data from gross domestic product Known last week, indicating that the US economy grew in the first quarter of a year 0.3% Compared to the last three months of 2022, compared to the 0.6% increase recorded in the last quarter of 2022.

Statistics also indicate that the annual growth rate in the first three months of the year was 1.1%, which is much lower than the 2.6% in the last quarter of 2022.

However, the rise in interest rates has no noticeable effects on employment ratewhich continues to record Solid dataIn March it fell by a tenth to 3.5%, with 236,000 jobs created