The Federal Reserve is sticking with its fight against inflation, confident that a massive government intervention to stabilize the banking system has averted a crisis.
The central bank raised its benchmark interest rate by a quarter of a percentage point Wednesday, signaling that high inflation continues to pose a threat to the economy, as the job market and price increases aren’t returning to normal as quickly as policymakers expected. Officials believe the bank turmoil should slow the economy down, too, in the same way that raising interest rates does – though it’s too soon to say how much.
Those moves came as Fed officials were eyeing other economic data warily. Just before the banks collapsed, Federal Reserve Chair Jerome H. Powell told Congress that the Fed might need to raise interest rates more aggressively than planned because the economy was still running too hot.
