The Federal Reserve on Wednesday released minutes from its March 21-22 policy meeting.
Fallout from the U.S. banking crisis is likely to tilt the economy into recession later this year, according to Federal Reserve documents released Wednesday.
Federal Reserve Board Chair Jerome Powell speaks during a news conference at the Federal Reserve in Washington, DC, on March 22, 2023.WASHINGTON – Fallout from the U.S. banking crisis is likely to tilt the economy into recession later this year, according to Federal Reserve documents released Wednesday.
"Given their assessment of the potential economic effects of the recent banking-sector developments, the staff's projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years," the meeting summary stated. Federal Open Market Committee officials ultimately voted to increase the benchmark borrowing rate by 0.25 percentage points, the ninth increase over the past year. That brought the fed funds rate to a target range of 4.75%-5%, its highest level since late-2007.came less than two weeks after Silicon Valley Bank, at the time the 17th largest institution in the U.S., collapsed following a run on deposits.
But concern over broader economic conditions remained high, particularly in light of the banking problems. Following the collapse of SVB and two other institutions, Fed officials opened a new borrowing facility for banks and eased conditions for emergency loans at the discount window.
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