Despite banking turmoil, Fed raises interest rate by 0.25 points to combat inflation

According to the officials' median estimate, the Federal Reserve is expecting to implement another quarter-point increase, bringing the peak range to 5% to 5.25%. This projection aligns with the Fed's previous estimate in December and is lower than what the markets had anticipated before the SVB crisis. During a news conference, Fed Chair Jerome Powell likened the crisis to a rate hike and potentially more significant than that.

In his statement, he mentioned that it is currently too early to determine the extent to which the stricter bank lending will hinder the economy and curb inflation. However, he acknowledged that the impact could be greater than anticipated, potentially leaving the Fed with less responsibility.

According to Powell, the transfer of deposits from midsize banks to larger ones has slowed down, and he also mentioned that no other banks are facing the same difficulties that Silicon Valley Bank encountered, which he referred to as an "outlier.