Fed to consider interest rate hike after another bank failure

Federal Reserve Chair Jerome Powell will announce Wednesday afternoon whether interest rates in the United States will go up for the 10th time in the last year.

Another interest rate hike is considered likely as Powell has stated that the board’s goal is to get the annual rate of inflation down to 2%. Since last year, the Fed has increased the Federal Funds rate from 0.75%–1% to 1.5%–1.75%. After a series of interest rate increases, the rate now stands at 4.75%–5%, its highest mark in 15 years. Dave Weisberger, former vice president of program trading at Morgan Stanley, told Scripps News that when interest rates go up, the price of bonds drops. When the value of these bonds drops, banks are less secure against bank runs.

It’s why Weisberger is among economists who believe the Federal Reserve should not be increasing interest rates even more, even if the Fed hasn’t hit its 2% inflation goal yet.

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