US interest rates increased despite worst banking turmoil since 2008

Published

3 years ago

March 22, 2023

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The Federal Reserve – the US central bank, known as the Fed – has increased interest rates for the ninth time in a row.

The rate has been increased by 0.25 percentage points in an effort to bring down inflation, which in the US stood at 6% over the 12 months to February.

A higher increase had been expected prior to the collapse of Silicon Valley Bank, the rescue of regional US banks and the takeover of Credit Suisse.

At the start of this month, before the worst banking turmoil since 2008 began, Fed chair Jerome Powell had floated the idea of a 0.5 percentage points increase, a speeding up of rate increases. Last month the programme of rate hikes was slowed when the Fed instituted a 0.25 percentage points rise.

High interest rates lead to higher profits for lenders but also put pressure on banks as some government bonds, state IOUs, lose value.

Following Wednesday’s increase, US interest rates stand at 4.75% to 5%, up from 4.5% to 4.75% since the last increase in February.

In the US, the interest rate is a range, rather than a single percentage – as in the UK – because the Fed is not permitted to set a specific number.

A target rate is instead set as a guide for banks to follow.

Some economists had expected the Fed to pause rate rises all together.

Addressing banking concerns, the Fed said the US banking system is sound and resilient but the effects of recent developments is unknown.

“Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. The extent of these effects is uncertain.”

Tighter conditions are equivalent to an interest rate hike and perhaps may be more impactful, Mr Powell said.

“Such a tightening of financial conditions would work in the same direction as rate tightening in principle. As a matter of fact, you can think of it as being the equivalent of a rate hike, or perhaps more than that, of course, it’s not possible to make that assessment assessment today with any precision whatsoever.”

Eyes now on the Bank of England after surprise UK inflation figures

Ed Conway

Economics & data editor

@EdConwaySky

A lot of people were looking at what the Federal Reserve were going to do.

Of course they are they are the US central bank, the equivalent obviously of the Bank of England in the UK, and they are deciding not just monetary policy, so interest rates, quantitative easing all of that stuff, but they also monitor and regulate financial stability.

And that’s really important because of course, we all know what’s happened over the course of the last few weeks.

You’ve had big problems in US banks, you’ve had the collapse of Silicon Valley Bank, Silvergate, Signature Bank, some other banks there as well, and a lot of concerns that the intervention from the Fed and its other authorities like the Treasury, and the FDIC (Federal Deposit Insurance Corporation) hasn’t actually helped, it’s made people a little bit more nervous.

So put all of that together and there were some question marks about whether the Federal Reserve was going to raise interest rates as much as a lot of people had expected.

Let’s have a look at the actual rates and what they’ve done.

After financial crisis rates were already pretty low but they went even lower after COVID-19 but they have come up fast in the course of the last year or so, an extraordinary rise, nine increases.

And the question, of course, was whether this latest increase was going to be half a percentage point or a quarter of a percentage point and they’d gone for a quarter so up to 5%.

But this is interesting because a lot of people thought up until quite recently, they were going to go higher, they were going to go up towards well above 5%.

And the reason they haven’t is kind of interesting, because the Federal Reserve and its chairman Jay Powell and in the press conference that followed that decision emphasising the concern was that the financial system is struggling with the impact of these higher interest rates.

And that is basically raising some questions about whether the Fed is going to raise interest rates quite as much as people recently thought.

That’s relevant for the UK because the Bank of England is set to decide on its interest rate, those rates are at a 4% at the moment, a lot of people thought they were going to be maybe paused because of this concern about what’s going on with the financial system.

But then along came those high inflation numbers that we’ve just got, up to 10.4%, higher than expected.

Of course, the bank’s job is to try and target inflation.

So now people think they’re going to raise interest rates in the UK, maybe by a quarter percentage point.

We’ll have to wait and see what they do, we’ll have to wait and see what governor Andrew Bailey has to say about that.

But it is now a tense moment because with these rates quite so high, a lot of people worry that the financial system is starting to squeak a bit.

A rate rethink

Speaking on Wednesday Mr Powell said ongoing interest rate increases are no longer appropriate to bring inflation down to its 2% target. Instead, he said “some” additional raises “may be appropriate”.

Addressing the banking turmoil, he said: “we are committed to learning the lessons from this episode, and to work to prevent episodes from events like this from happening again.”

It was also the first time since December that the Fed issued interest rate projections.

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GDP, a measure of economic output and of economic health, will be just 0.4% this year, Mr Powell said, and is forecast to increase to 1.2% next year, well below the growth rate many politicians would hope for.

The unemployment rate is expected to rise to 4.5% at the end of this year and 4.6% at the end of next year.

US

Trump disparages Russian military – and backs Ukraine to retake all lost territory

Published

2 hours ago

September 24, 2025

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Trump disparages Russian military - and backs Ukraine to retake all lost territory

US President Donald Trump has said he believes Ukraine could retake all its occupied territory and described Russia as a “paper tiger”.

Ukrainian leader Volodymyr Zelenskyy told Sky News correspondent Mark Stone it was a “big shift” from his US counterpart.

Mr Trump, speaking to French President Emmanuel Macron at the United Nations in New York, said his relationship with Vladimir Putin had turned out to be meaningless.

Writing on Truth Social, the US president said: “I think Ukraine, with the support of the European Union, is in a position to fight and WIN all of Ukraine back in its original form.

“With time, patience, and the financial support of Europe and, in particular, NATO, the original Borders from where this War started, is very much an option.”

Mr Trump wrote that he had gained a greater understanding of the “economic trouble” the war was causing Moscow.

He said Russia had been “fighting aimlessly” for three-and-a-half years and had it been a “real military power” it would have defeated Ukraine in less than a week.

Mr Trump added: “This is not distinguishing Russia. In fact, it is very much making them look like ‘a paper tiger’.”

Mr Trump’s tone contrasted greatly with his red-carpet treatment for the Russian president at a summit in Alaska last month, part of a push to expedite an end to the war in Ukraine.

The US president has previously suggested Ukraine would never be able to reclaim all the territory Russia has occupied since seizing the Crimean Peninsula in 2014.

Mr Zelenskyy later said he was surprised by Mr Trump’s comments, telling Fox News’ Special Report he has a better relationship with the US president than before.

He said the comments were a very positive signal Mr Trump and the US will be with Ukraine until the end of the war.

Earlier on Tuesday, while talking to Mr Zelenskyy at the United Nations, Mr Trump was asked by reporters whether he thought NATO should shoot down Russian planes if they entered NATO airspace.

“Yes, I do,” Mr Trump replied.

Asked whether the US would support NATO in shooting down Russian aircraft, Mr Trump said it depended on the circumstances.

On Truth Social, he said the US would continue to supply weapons to NATO and it was for the military alliance to “do what they want with them”.

Ukraine, he said, with the “support of the European Union”, is in a position to “fight and win all of Ukraine back in its original form”.

Kyiv would need the “financial support of Europe and, in particular, NATO”, he said.

But, given those caveats, he said the “original borders from where this war started is very much an option”.

In a joint statement following the president’s comments, G7 foreign ministers said discussions were ongoing about additional economic sanctions on Russia.

Mr Trump also suggested the Russian people are not aware of “what is really going on with this war”.

He added: “Most of their money is being spent on fighting Ukraine. Putin and Russia are in big economic trouble and this is the time for Ukraine to act.”

Ukraine has lost large areas of land in the east of the country. In the Donetsk region, Russia now controls about 70% of the territory. Kyiv’s forces have been pushed back to a string of four cities analysts have dubbed the “fortress belt”.

Moscow has partly annexed three other regions, too: Luhansk in the east, Zaporizhzhia and Kherson further west.

Meanwhile, Russia appears to be provoking its neighbours to the west. Last week, Estonia said three Russian MiG-31 fighter jets violated its airspace for 12 minutes before Italian NATO jets escorted them away.

The week before, about 20 Russian drones entered Polish airspace, prompting NATO jets to shoot some of them down.

NATO has now beefed up its defence of Europe’s eastern flank.

US

Ryan Routh found guilty of trying to assassinate Donald Trump – and attempts to stab himself after verdict

Published

5 hours ago

September 23, 2025

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Ryan Routh found guilty of trying to assassinate Donald Trump - and attempts to stab himself after verdict

A 59-year-old man has been found guilty of trying to assassinate Donald Trump on a golf course.

Ryan Routh attempted to stab himself in the neck with a pen shortly after he was convicted on all five charges against him.

Marshals quickly surrounded Routh and he did not hurt himself. They then dragged him out of the courtroom in Fort Pierce, Florida.

His daughter Sara Routh screamed: “Dad I love you don’t do anything. I’ll get you out. He didn’t hurt anybody.”

She continued screaming in the courtroom as her father was removed, and she said the case against him was rigged.

He was later brought back into court, wearing a white shirt and no tie. There was no blood visible on his neck.

The judge wanted to make sure Routh understood he was found guilty. Routh will be sentenced on 18 December, the judge announced.

His son Adam said “we love you Dad” and Routh turned around and winked as he was taken away.

‘Carefully crafted plot’

A jury of five men and seven women decided Routh intended to kill Mr Trump when he pointed a rifle through a fence as the then US presidential candidate was playing golf in West Palm Beach, Florida, in September last year.

Routh fled without firing a shot after a Secret Service agent patrolling the course ahead of Mr Trump saw Routh and the rifle and opened fire, according to witness testimony in the case.

At the start of the trial, prosecutor John Shipley said “this plot was carefully crafted and deadly serious”, adding that without the agent intervening, “Donald Trump would not be alive”.

The charges against Routh

Routh had been charged with attempting to assassinate a major presidential candidate, possessing a firearm in furtherance of a crime of violence, assaulting a federal officer, possessing a firearm and ammunition as a convicted felon and possessing a firearm with an obliterated serial number.

The incident occurred weeks after a bullet grazed the president’s ear in another assassination attempt at a rally in Butler, Pennsylvania.

Routh, who faces the prospect of life in prison, pleaded not guilty to all the charges against him and chose to defend himself in court.

He spent weeks plotting to kill Mr Trump before aiming a rifle through shrubbery as the Republican candidate played golf on 15 September 2024, at his West Palm Beach country club, according to prosecutors.

What did Routh say?

Routh told jurors in his closing argument that he did not intend to kill anyone that day.

“It’s hard for me to believe that a crime occurred if the trigger was never pulled,” Routh said.

He said he could see Mr Trump as he was on the path toward the sixth-hole green and noted he also could have shot a Secret Service agent who confronted him if he had intended to harm anyone.

Trump’s reaction

Following the guilty verdict, the president said on Truth Social that Routh was “an evil man with an evil intention, and they caught him”.

He thanked the Secret Service and “the wonderful person who spotted him running from the site of the crime”, and provided authorities with his vehicle registration number.

The guilty verdict “illustrates the Department of Justice’s commitment to punishing those who engage in political violence”, Attorney General Pam Bondi said in a post on X.

“This attempted assassination was not only an attack on our president, but an affront to our very nation,” Ms Bondi said.

US

‘Greatest con job’, migrant ‘invasion’ and Sharia law in London: Trump’s claims at UN Assembly

Published

5 hours ago

September 23, 2025

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'Greatest con job', migrant 'invasion' and Sharia law in London: Trump's claims at UN Assembly

President Trump’s speech to the UN General Assembly featured a number of dubious, hyperbolic and headline-grabbing statements.

Here are some of the main soundbites from his 56-minute moment in front of world leaders in New York.

‘London wants Sharia law’

The president continued his long-running criticism of London’s mayor, Sir Sadiq Khan, telling delegates: “I look at London, where you have a terrible mayor, terrible, terrible mayor, and it’s been changed, it’s been so changed.

“Now they want to go to Sharia law. But you are in a different country, you can’t do that.”

It’s not clear why he raised Sharia law – which is Islam’s legal system – but there is no evidence of it being administered by civil authorities in London.

A spokesperson for Sir Sadiq said: “We are not going to dignify his appalling and bigoted comments with a response.

“London is the greatest city in the world, safer than major US cities, and we’re delighted to welcome the record number of US citizens moving here.”

Immigration will be ‘death of Western Europe’

The president, who’s clamped down on migrants coming via America’s southern border and ordered immigration raids, warned the UN “immigration and their suicidal energy ideas will be the death of Western Europe if something is not done immediately”.

He said Europe was being “invaded by a force of illegal aliens like nobody’s ever seen before”.

“Illegal aliens are pouring into Europe and nobody’s doing anything to change it,” Mr Trump said.

Directly addressing European leaders, he added: “You’re doing it because you want to be nice. You want to be politically correct, and you’re destroying your heritage.”

The UK has seen a record number of illegal migrants arrive in small boats for this point in the year – and there has been a spike in legal migration too. How to tackle the problem continues to be a key political battleground.

Climate change world’s ‘greatest con job’

Mr Trump urged Europe to abandon green energy plans and called climate change “the greatest con job ever perpetrated on the world” with predictions “made by stupid people that have cost their countries fortunes”.

He said scientists had previously predicted some nations might be “wiped off the map” by now – but that’s “not happening”.

“If you don’t get away from the green scam, your country is going to fail,” he argued.

The vast majority of scientists accept climate change is largely man-made and already having an effect; for example by causing glaciers to shrink, sea levels to rise, and making wildfires more likely.

He also reiterated his belief that Britain should make more of untapped North Sea oil, but claimed it was “so highly taxed that no developer, no oil company can go there”.

The president is well known for his loathing of renewable energy and used his speech to also take a swipe at the UK’s green energy efforts.

“I want to stop seeing them ruining that beautiful Scottish and English countryside with windmills and massive solar panels that go seven miles by seven miles, taking away farmland,” the president said.

The UK’s largest solar plant is Cleve Hill in Kent, which stretches about 1.8 miles x 1 mile at its widest.

However, the country’s largest onshore wind farm at Whitelee, near Glasgow, comprises 215 turbines over about 30 square miles.

‘Everyone’ says Trump should get prize after ‘ending seven wars’

Mr Trump is widely believed to be very keen to get the Nobel Peace Prize, and today he again claimed to have stopped “seven wars” – despite US efforts to get a ceasefire in Ukraine and Gaza so far failing.

“I ended seven wars and in all cases they were raging with countless thousands of people being killed,” he said, adding that “no president or prime minister” has “ever done anything close to that”.

However, the president said he actually isn’t concerned about being honoured for his efforts.

“Everyone says that I should get the Nobel Peace Prize for each one of these achievements,” he told world leaders.

“The real prize will be the sons and daughters who live to grow up with their mothers and fathers because millions of people are no longer being killed in endless and unglorious wars,” the president said.

“What I care about is not winning prizes as much as saving lives.”

He also took a swipe at what he said was a lax approach from the UN, saying it was “too bad that I had to do these things instead of the United Nations doing them”.

Although his administration has helped mediate relations in disputes between countries such as India and Pakistan, and Cambodia and Thailand, experts say his impact isn’t as clear cut as he makes out.