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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.

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A five-point guide to the banking panic of 2023

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.”

Read more:
A five-stop tour through the banking panic of 2023
Inflation rise surprised even the Bank of England – and now interest rate hike looks near-certain

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


Ed Conway - Economics editor

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.

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Marjorie Taylor Greene says she’s received threats over Trump feud

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Marjorie Taylor Greene says she's received threats over Trump feud

Republican congresswoman Marjorie Taylor Greene says she’s facing threats following a barrage of personal criticism from US President Donald Trump on social media.

The former MAGA ally posted on X, saying she had been contacted by private security firms “with warnings for my safety as a hotbed of threats against me are being fueled and egged on by the most powerful man in the world”.

She went on: “As a woman, I take threats from men seriously.

“I now have a small understanding of the fear and pressure the women, who are victims of Jeffrey Epstein and his cabal, must feel.

“As a Republican, who overwhelmingly votes for President Trump’s bills and agenda, his aggression against me, which also fuels the venomous nature of his radical internet trolls (many of whom are paid), this is completely shocking to everyone.”

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‘MAGA meltdown going on because of Epstein’

Calling her “wacky,” a “RINO” (Republican In Name Only) and swapping her surname from Greene to “Brown” (“Green grass turns Brown when it begins to ROT!”), Donald Trump rescinded his support for the Georgia representative and suggested he could back a primary challenger against her.

Ms Greene claims the president’s “aggressive rhetoric” is in retaliation for her support for releasing files about disgraced paedophile financier Jeffrey Epstein.

After the US government shutdown ended, a petition to vote on the full release of the files about Epstein received enough signatures – including that of Ms Greene – to bring it to a vote in the House of Representatives.

Ms Greene claimed text messages she sent to Mr Trump over the Epstein files “sent him over the edge,” writing on social media: “Of course he’s coming after me hard to make an example to scare all the other Republicans before next week’s vote to release the Epstein files.”

She went on: “It’s astonishing really, how hard he’s fighting to stop the Epstein files from coming out that he actually goes to this level.”

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Trump rebukes MAGA ally over foreign policy

High-profile figures, including Mr Trump, have been referenced in some of the documents.

The White House has said the “selectively leaked emails” were an attempt to “create a fake narrative to smear President Trump”, who has consistently denied any involvement or knowledge about Epstein’s sex trafficking operation.

Mr Trump has called the Epstein files a “hoax” created by the Democrats to “deflect” from the shutdown.

Watch Sky’s Martha Kelner clash with Taylor Greene earlier this year…

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Marjorie Taylor Greene clashes with Sky correspondent

In another post on X, Ms Greene wrote: “I never thought that fighting to release the Epstein files, defending women who were victims of rape, and fighting to expose the web of rich powerful elites would have caused this, but here we are.

“And it truly speaks for itself. There needs to be a new way forward.”

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The new Epstein files: The key takeaways

Read more on Jeffrey Epstein:
Ghislaine Maxwell ‘wants Trump to commute sentence’
What Epstein’s right-hand woman said about Trump and Andrew

Epstein took his own life in prison in 2019 while awaiting a trial for sex trafficking charges and was accused of running a “vast network” of underage girls for sex. He pleaded not guilty.

Following a conviction for soliciting prostitution from a minor in 2008, he was registered as a sex offender.

Mr Trump has consistently denied knowledge of Epstein’s crimes.

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Donald Trump confirms he will sue the BBC over Panorama edit – despite broadcaster’s apology

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Donald Trump confirms he will sue the BBC over Panorama edit - despite broadcaster's apology

Donald Trump has said he will sue the BBC for between $1bn and $5bn over the editing of his speech on Panorama.

The US president confirmed he would be taking legal action against the broadcaster while on Air Force One overnight on Saturday.

“We’ll sue them. We’ll sue them for anywhere between a billion (£792m) and five billion dollars (£3.79bn), probably sometime next week,” he told reporters.

“We have to do it, they’ve even admitted that they cheated. Not that they couldn’t have not done that. They cheated. They changed the words coming out of my mouth.”

Mr Trump then told reporters he would discuss the matter with Prime Minister Sir Keir Starmer over the weekend, and claimed “the people of the UK are very angry about what happened… because it shows the BBC is fake news”.

Separately, Mr Trump told GB News: “I’m not looking to get into lawsuits, but I think I have an obligation to do it.

“This was so egregious. If you don’t do it, you don’t stop it from happening again with other people.”

More on Bbc

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BBC crisis: How did it happen?

The Daily Telegraph reported earlier this month that an internal memo raised concerns about the BBC’s editing of a speech made by Mr Trump on 6 January 2021, just before a mob rioted at the US Capitol building, on the news programme.

The concerns regard clips spliced together from sections of the president’s speech to make it appear he told supporters he was going to walk to the US Capitol with them to “fight like hell” in the documentary Trump: A Second Chance?, which was broadcast by the BBC the week before last year’s US election.

Following a backlash, both BBC director-general Tim Davie and BBC News chief executive Deborah Turness resigned from their roles.

‘No basis for defamation claim’

On Thursday, the broadcaster officially apologised to the president and added that it was an “error of judgement” and the programme will “not be broadcast again in this form on any BBC platforms”.

A spokesperson said that “the BBC sincerely regrets the manner in which the video clip was edited,” but they also added that “we strongly disagree there is a basis for a defamation claim”.

Earlier this week, Mr Trump’s lawyers threatened to sue the BBC for $1bn unless it apologised, retracted the clip, and compensated him.

The US president said he would sue the broadcaster for between $1bn and $5bn. File pic: PA
Image:
The US president said he would sue the broadcaster for between $1bn and $5bn. File pic: PA

Legal challenges

But legal experts have said that Mr Trump would face challenges taking the case to court in the UK or the US.

The deadline to bring the case to UK courts, where defamation damages rarely exceed £100,000 ($132,000), has already expired because the documentary aired in October 2024, which is more than one year.

Also because the documentary was not shown in the US, it would be hard to show that Americans thought less of the president because of a programme they could not watch.

Read more from Sky News:
Key findings in 20,000 pages of documents in the Epstein files

Banksy art theft lands burglar with 13-month prison sentence

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Sky’s Katie Spencer on what BBC bosses told staff on call over Trump row

Newsnight allegations

The BBC has said it was looking into fresh allegations, published in The Telegraph, that its Newsnight show also selectively edited footage of the same speech in a report broadcast in June 2022.

A BBC spokesperson said: “The BBC holds itself to the highest editorial standards. This matter has been brought to our attention and we are now looking into it.”

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Trump to push ahead with BBC lawsuit: Three experts on why he might struggle to win

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Trump to push ahead with BBC lawsuit: Three experts on why he might struggle to win

Donald Trump has confirmed he plans to sue the BBC for between $1bn and $5bn over the editing of his speech in a Panorama news programme.

The corporation said it was an “error of judgement” to splice two sections of his speech together, and the programme will “not be broadcast again in this form on any BBC platforms”.

“We have to do it, they’ve even admitted that they cheated,” the US president told reporters overnight on Saturday.

“Not that they couldn’t have not done that. They cheated. They changed the words coming out of my mouth.”

However, the lawsuit will not be easy, according to three experts who have spoken to Sky News.

“Filing a lawsuit is easy,” said Mark Stevens, media law solicitor at Howard Kennedy, to Sky presenter Samantha Washington.

“Winning one is, in this case, like trying to lasso a tornado: technically possible, but you’re going to need more than a cowboy hat.”

So why would this case be so hard to win?

Where did the damage occur?

The Panorama episode was not aired in the US, which may make Mr Trump’s case harder.

“For a libel claim to succeed, harm must occur where the case is brought,” said Mr Stevens.

“It’s hard to argue [for] that reputational damage in a jurisdiction where the content wasn’t aired.”

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BBC crisis: How did it happen?

The president will also have to show that his reputation suffered actual harm.

“But his reputation was pretty damaged on this issue before,” said Mr Stevens.

“There have been judicial findings, congressional hearings, global media coverage around 6 January. Laying that responsibility for any further harm at the door of the BBC seems pretty tenuous.”

Was the mistake malicious?

In order to sue someone for libel in the US, you have to prove they did it on purpose – or with ‘malicious intent’.

That might be hard to prove, according to Alan Rusbridger, editor of Prospect magazine and former editor-in-chief of the Guardian.

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‘Trump suing BBC is just noise and bluster’

“I just don’t think that he can do that,” he said.

Since 1964, US public officials have had to prove that what was said against them was made with “knowledge that it was false or with reckless disregard for the truth”.

“The reason for that, when the Supreme Court passed this in 1964, is the chilling effect on journalism,” said Mr Rusbridger.

“If a journalist makes a mistake, [and] this clearly was a mistake, if that ends up with their employers having to pay $1bn, $2bn, $3bn, that would be a dreadful chill on journalism.

“Unless Trump can prove that whoever this was who was editing this film did it with malice, the case is open and shut.”

Read more US news:
‘Earthquake in Team MAGA’ as Trump ally turns enemy
Prison staff fired after leaking Maxwell’s emails, says lawyer

Is he suing for too much money?

Mr Trump says he’s going to sue for between $1bn and $5bn, figures former BBC legal correspondent Clive Coleman described as “very fanciful”.

“That, I think, is very fanciful because he will have to show that he has suffered billions of dollars worth of reputational damage.

“We know that this was back in 2020 when the speech was made. He went on to be successful in business and, of course, to be re-elected as US president.”

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‘Trump faces some really big hurdles’ in suing BBC

However, Mr Coleman did suggest the BBC should try to “bring this to an end as speedily as possible”.

“Litigation is always a commercial decision and it’s a reputational decision,” he said.

“The legal processes towards a court case are long and arduous and this is going to blow up in the news pretty regularly between now and then.”

Other news organisations facing litigation by Mr Trump have settled out of court for “sums like $15m, $16m”, according to Mr Coleman.

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