INDIANA – Federal Reserve officials are expected to raise interest rates by a quarter point today.
The decision comes just two days after the collapse of First Republic Bank, the second-biggest bank failure in US history.
When interest rates are raised, banks need to raise the rates on their savings accounts in order to lure depositors from their competitors. That can put a disproportionate amount of pressure on mid-sized and regional banks — like the ones who saw depositors pull their money when the banking crisis began in March.
The Federal Reserve will move to raise interest rates today to lower inflation. To do that, it has to intentionally slow parts of the economy by making it more expensive for banks, and thereby consumers, to borrow money.
