Fed rate hike: What the latest increase means for your savings

On March 22, the Federal Reserve raised interest rates by a quarter percent, ending nearly two weeks of uncertainty during a period of unrest in the financial sector.

Now, between 4.75% and 5% is the benchmark borrowing rate for federal funds.

The action indicates that the Fed still thinks it's important to press through with its efforts to reduce inflation, despite the failure of Silicon Valley Bank and other financial institutions in recent weeks.

Recent developments are anticipated to have an impact on economic activity, hiring, and inflation by tightening lending conditions for families and companies.

Uncertainty surrounds the scope of these impacts. The Committee is nonetheless very aware of inflation risk.

At its February meeting, the Fed also increased interest rates by 0.25%, following a 0.5% increase in December.

These lower increases indicated that the Fed, which had previously raised rates by an average of 0.75% over a string of four sessions, thought inflation was beginning to moderate.

Interest rates on some savings accounts and certificates of deposit (CDs) have reached their highest levels in 15 years as a result of that record run of rate hikes.

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