<div style="text-align: justify; "><b style="font-size: 1rem;">The US Federal Reserve raised its benchmark lending rate on Wednesday, as it sought to strike a balance between curbing high inflation and averting further upheaval in the commercial banking sector.</b><br></div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The quarter-point increase, which was in line with expectations, lifted their interest rate target to between 4.75 and 5 percent at the end of a two-day policy meeting, the Fed said in a statement.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The policy-setting Federal Open Market Committee (FOMC) added that "some additional policy firming may be appropriate" to get to a stance that is sufficiently restrictive to bring inflation down.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The latest increase was the same size as the central bank's previous rate decision in February, and marks its ninth straight rate hike.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The Fed also updated its economic projections on Wednesday, slightly lowering its 2023 GDP growth projections 2023 to 0.4 percent from 0.5 percent in December.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Median projections for the Fed's benchmark rate at the end of this year were unchanged, while inflation expectations rose slightly.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">- 'Bumpy ride' to bring inflation down -</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Wednesday's decision underscores the Fed's determination to tackle inflation, which remains stubbornly above policymakers' long-term annual target of two percent despite the sustained effort to lower price increases.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">"Getting inflation back down to two percent has a long way to go and is likely to be bumpy," Fed Chair Jerome Powell said during a press conference on Wednesday afternoon.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The Fed warned in its earlier rate announcement that the recent banking turmoil sparked by the collapse of Silicon Valley Bank (SVB) could impact the availability of credit for households and businesses, and "weigh on economic activity, hiring, and inflation."</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">SVB's excessive exposure to interest-rate risk left it vulnerable when the Fed began rapidly raising rates. The Californian lender was forced to realize losses on bonds it had intended to hold for a long time, which led concerned customers to rapidly pull their money from the bank, bringing about its collapse and striking fear into the financial markets.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Banking stocks tumbled in the weeks that followed, leading to the collapse of two additional regional lenders and the merger under pressure between Credit Suisse and its regional rival UBS.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">In response, regulators introduced a series of policies designed to ensure that banks could access loans in a hurry if they needed, in order to avoid a repeat of the conditions that precipitated SVB's collapse.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">- Fed to consider toughening up regulation -</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The bank's management had "failed badly," Powell told reporters after the rate announcement Wednesday, adding that the Fed would look into boosting the supervision and regulation of US banks.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The impact of SVB's collapse on monetary policy was equivalent to "another rate hike, or perhaps more than that," he said, suggesting it could aid the bank in its fight against inflation.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">But he insisted that the US banking system remained "sound and resilient" overall.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">"We will continue to closely monitor conditions in the banking system and are prepared to use all of our tools as needed to keep it safe and sound," he told reporters, adding that the Fed was "committed to learning the lessons from this episode, and to work to prevent episodes from events like this from happening again."</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">- Confusion over deposits weighs on markets -</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">A short distance from the Fed, Treasury Secretary Janet Yellen caused confusion during a Senate hearing about the level of support US authorities were willing to extend to uninsured depositors -- those who hold more than $250,000 in a single bank.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">"I have not considered or discussed anything having to do with blanket insurance, insurance, or guarantees of all deposits," Yellen told Senators on Capitol Hill.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Her comments appeared to contradict Jerome Powell's comments during the Fed press conference.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">"Depositors should assume that their deposits are safe," he told reporters.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">"You've seen that we have the tools to protect depositors when there's a threat of serious harm to the economy or to the financial system, and we're prepared to use those tools," he said.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The S&amp;P 500 index ended the day down almost 1.7 percent following Powell and Yellen's comments.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Wednesday's announcement follows on the heels of the European Central Bank's decision last week to raise rates by 0.5 percentage points.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">ECB chief Christine Lagarde warned on Wednesday that the eurozone's monetary policymakers "will still have ground to cover to make sure that inflation pressures are stamped out."</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">She said the recent banking turmoil could add to "downside risks" in the single currency area. AFP</div><div style="text-align: justify;"><br></div><div style="text-align: justify; ">bnbd24/kh</div>