US White House Economist: "Rapid Interest Rate Hikes Negative for Banks"

Possibility of 0.25% Point Increase in US Base Interest Rate

There was an opinion from the White House that the Federal Reserve's (Fed) rapid interest rate hikes could have a negative impact on the banking sector.

According to major foreign media, Heather Boushey, a member of the White House Council of Economic Advisers (CEA), expressed this view in an interview with foreign media on the 2nd (local time). The statement came on the day the two-day Federal Open Market Committee (FOMC) meeting, which decides the benchmark interest rate, began.

[Image source=Pixabay]

In the market, there is a diagnosis that, as Boushey mentioned, the steep increase in the benchmark interest rate has lowered the value of bank bonds and worsened their financial structure. There is also an assessment that this has caused a bank run, where depositors, dissatisfied with the current interest rate level, switch to high-interest products from other institutions, leading to a massive withdrawal of deposits.

In the United States, there is a growing possibility that the Fed may raise the benchmark interest rate by 0.25 percentage points through this meeting. In that case, the U.S. benchmark interest rate would rise to 5.0?5.25%, reaching the highest level in 16 years. JP Morgan, the largest bank in the U.S., has previously predicted that the likelihood of additional rate hikes stopping after this increase is the greatest.

This content was produced with the assistance of AI translation services.