the banking crisis is “likely” to weigh on the economy, employment and inflation, warns the American central bank

The American central bank (Fed) is worried about the turbulence caused by the banking crisis which is rocking the United States. In a statement released Wednesday, March 22, the Federal Reserve says the recent banking crisis was “likely (…) to weigh on economic activity, hiring and inflation”. “The magnitude of these effects is uncertain”she pointed out.

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However, savers’ money is “safe” and the banking system remains solid, assured in a press conference the president of the Fed, Jerome Powell. He also pointed out that the institution is “resolved to learn the lessons of the episode”. “We need to strengthen supervision and regulation” banks, he added, recalling that an investigation by regulators is underway. He also expressed support for the conduct of an independent investigation.

In an attempt to stem the crisis, the Fed raised its rate by a quarter of a percentage point. The main key rate of the Fed is now in a range of 4.75 to 5%, the highest level since 2006. And the institution provides additional increases. It must be said that the central bank was faced with a difficult trade-off: continue to raise its main key rate to curb high inflation or take a break, in order to avoid aggravating the difficulties of the banks.