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Why the Fed raised rates despite tighter credit conditions

The US Fed is flying blind. On the one hand, it says it doesn’t know to what extent financial conditions have tightened. On the other, it raises the Fed Funds rate by 25 basis points 

March 23, 2023 / 08:26 AM IST
Why the Fed raised rates despite tighter credit conditions

As for the ‘soft landing’, Powell said ‘there is a pathway to a soft landing and we're trying to find it.’ That is far from bullish for growth (Photo by Alex Wong/Getty Images)

Fed chair Jerome Powell delivered the 25 basis point rate hike widely expected by the Fed Funds futures market, but the statement by the Federal Open Markets Committee (FOMC)had a dovish bias, seen from the fall in the yield on the 2-year Treasury note and in the dollar index. Fed Fund futures have increased the odds of no further rate hikes. At the press conference, Powell drew attention to the use of the words ‘may’ and ‘some’ in the line...

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