The Fed hiked its benchmark Fed Funds Rate by 25 basis points at its meeting last Wednesday, marking the ninth hike since last March and bringing it to a range of 4.75% to 5%. The Fed Funds Rate is the interest rate for overnight borrowing for banks and it is not the same as mortgage rates. When the Fed hikes the Fed Funds Rate, they are trying to slow the economy and curb inflation.

What’s the bottom line? In the press conference following the meeting, Fed Chair Jerome Powell was grilled regarding the recent turmoil in the regional banking sector. He stressed that the Fed “took powerful actions with Treasury and the FDIC, which demonstrate that all depositors' savings are safe and that the banking system is safe.” Powell noted that “deposit flows in the banking system have stabilized over the last week" and he criticized Silicon Valley Bank's management, saying that the bank "failed badly" and exposed their customers to "significant liquidity risk and interest rate risk."

Powell also said the committee considered a pause in rate hikes following the banking crisis but ultimately decided with a “very strong consensus” to proceed with hiking. Powell noted the Fed felt it was critical to sustain the public’s confidence that they can restore price stability, and they wanted to take action in furtherance of this goal.

Powell acknowledged that inflation has moderated since the middle of last year, but he cautioned that “the process of getting inflation back down to 2 percent has a long way to go and is likely to be bumpy.”