US interest rates increased despite worst banking turmoil since 2008

Published

2 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

Trade war: Trump reveals first nations to pay delayed ‘liberation day’ tariffs

Published

33 mins ago

July 7, 2025

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Trade war: Trump reveals first nations to pay delayed 'liberation day' tariffs

Donald Trump has revealed hefty trade tariffs against at least seven countries, to be applied from 1 August.

The initial announcement, via his Truth Social platform, concerned Japan and South Korea.

Both would face 25% rates on all goods, he said.

Malaysia and Kazakhstan were later added to the list, while South Africa was told it faced a 30% rate.

Laos and Myanmar were hit with 40% duties.

It marks the restart of the threatened “liberation day” escalation that was paused in April, for 90 days, to allow for negotiations to take place with all US trading partners.

The US president is sending each nation a letter to inform them of the tariff rates they face and warn against retaliatory tariffs.

Those duties will come on top of sector-specific tariffs – such as 50% rates covering steel – which are already in force.

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Mr Trump says in the letters that rates can be adjusted “upward or downward, depending on our relationship with your country”.

Country-specific tariffs had been due to take effect from Wednesday this week but Mr Trump had earlier revealed that nations would start to get letters instead, setting out the US position.

Duties would take effect from 1 August, without any subsequent deal being agreed, it was announced.

The letters sent to Japan and South Korea cited persistent trade imbalances for the rates and included the sentence: “We invite you to participate in the extraordinary Economy of the United States, the Number One Market in the World, by far.”

He ended both letters by saying, “Thank you for your attention to this matter!”

The European Union – the biggest single US trading partner – is among those set to get a letter in the coming days.

Mr Trump has also threatened an additional 10% tariff on any country aligning itself with the “anti-American policies” of BRICS nations – those are Brazil, Russia, India, China and South Africa and whose members also include Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates.

The UK, bar a massive shock U-turn, should be exempt.

The country was the first to be granted a trade deal, of sorts, in May and the Trump administration has claimed many others had been offering concessions since the clock ticked down to 9 July.

The UK is not expected to face any changes to its current 10% rate due to the trade truce, which came into effect last week.

While UK-made cars aerospace products face no duties under a new quota arrangement, it still remains to be seen whether 25% tariffs on UK-produced steel and aluminium will be cancelled.

They could, conceivably, even be raised to 50%, as is currently the case for America’s other trading partners, because no agreement on eliminating the rate was reached when the government struck its deal in May.

It all amounts to more uncertainty for the UK steel sector.

A No 10 spokesman said on Monday: “Our work with the US continues to get this deal implemented as soon as possible.

“That will remove the 25% tariff on UK steel and aluminium, making us the only country in the world to have tariffs removed on these products.

“The US agreed to remove tariffs on these products as part of our agreement on 8 May. It reiterated that again at the G7 last month. The discussions continue, and will continue to do so.”

China and Vietnam have also secured some US concessions.

The dollar strengthened but US stock markets lost ground in the wake of the letters to Japan and South Korea being made public, with the broad-based S&P 500 down by 1%.

Stock markets in both Japan and South Korea were closed for the day but US-traded shares of SK Telecom and LG Display were down 7.5% and 5.8% respectively.

US

Texas floods: The victims and people missing that have been named so far

Published

33 mins ago

July 7, 2025

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Texas floods: The victims and people missing that have been named so far

Details of those who have died and those who are missing after US flash floods are slowly emerging – with several young girls among those unaccounted for.

At least 82 people have died from the flooding in Texas, with an unknown number of people – including 10 girls and a counsellor from Camp Mystic in Kerr County – still missing.

As much as 10ins (25cm) of heavy rain fell in just a few hours overnight in central Kerr County on Friday, causing the banks of the Guadalupe River to burst at around 4am local time.

Tributes to those who died, and appeals for those who are still missing, are now being shared.

Who are the victims?

Renee Smajstrla, eight

Renee’s uncle Shawn Salta confirmed the eight-year-old had died, and said she was one of 700 children staying at Camp Mystic.

“Renee has been found and while not the outcome we prayed for, the social media outreach likely assisted the first responders in helping to identify her so quickly,” he said.

“We are thankful she was with her friends and having the time of her life, as evidenced by this picture from yesterday.

“She will forever be living her best life at Camp Mystic.”

Sarah Marsh, eight

Mountain Brook mayor Stewart Welch confirmed the death of eight-year-old Sarah, from Alabama, who was a pupil at Cherokee Bend Elementary.

“This is an unimaginable loss for her family, her school, and our entire community,” he said. “Sarah’s passing is a sorrow shared by all of us, and our hearts are with those who knew and loved her.

“As we grieve alongside the Marsh family, we also remember the many others affected by this tragedy.”

Eloise Peck and Lila Bonner, both nine

Eloise’s mother Missy Peck told local broadcaster FOX4 that her daughter and Lila were best friends and cabinmates at Camp Mystic.

Writing about her daughter on Instagram, Ms Peck said: “She lost her life in the tragic flooding… our family is grieving and processing this unimaginable loss together.”

Lila’s family told NBC Dallas Fort Worth, a local affiliate network of Sky’s US partner network, that they were in “unimaginable grief”, and said: “We ache with all who loved her.”

Janie Hunt, nine

Janie’s family confirmed her death to a reporter from NBC Dallas Fort Worth, who said “her mother tells me she’s devastated”.

Richard ‘Dick’ Eastland, owner of Camp Mystic

Kerr County judge Rob Kelly told the Washington Post that Mr Eastland, who owned the camp died in a helicopter on the way to a Houston hospital.

Local outlet The Kerrville Daily Times reported he was killed while trying to save the girls from the flash floods.

“It doesn’t surprise me at all that his last act of kindness and sacrifice was working to save the lives of campers,” guest columnist Paige Sumner said in the Daily Times’ tribute to Mr Eastland.

Blair and Brooke Harber, 13 and 11

RJ Harber told CNN his daughters died during flooding in Kerr County, saying Blair “was a gifted student and had a generous kind heart”.

He added that Brooke “was like a light in any room, people gravitated to her and she made them laugh and enjoy the moment”.

He also said both his parents were still missing.

Jane Ragsdale, owner of Heart O’ the Hills camp

On Heart O’ the Hills’s website, the camp confirmed it was “right in the path of the flood” along the Guadalupe River.

While there were no campers in residence, Jane Ragsdale died. The camp said: “We at the camp are stunned and deeply saddened by Jane’s death.

“She embodied the spirit of Heart O’ the Hills and was exactly the type of strong, joyful woman that the camp aimed to develop with the girls entrusted to us each summer.”

Julian Ryan, 27

Relatives of Mr Ryan told local news broadcaster KHOU 11 that he died saving his family from floodwaters in Texas Hill County.

They described how he tried to smash a window to help them escape the rising water, but it cut his arm and he bled out before help could arrive.

Tanya Burwick, 62

Ms Burwick was heading to work at a Walmart in the San Angelo area early Friday when the flood waters hit.

When she didn’t show up for work, her employer filed a missing persons report and sent another colleague to look for the 62-year-old.

Police found Ms Burwick’s unoccupied SUV fully submerged later that day, before locating her body on Saturday morning, “several blocks” away from her car.

Her daughter, Lindsey Burwick, said her mother was a beloved parent, grandparent and colleague to many, adding: “She lit up the room and had a laugh that made other people laugh.”

Who is still missing?

Penny, Emlyn, and 11-year-old Madelyn ‘Emmy’ Jeffrey

Christin Jeffrey Jones posted on Facebook that her parents Penny and Emlyn Jeffrey are missing, as well as her niece Madelyn ‘Emmy’ Jeffrey.

She said her family were in Hunt, Texas, and “were spending the night at their cabin on the river at Casa Bonita which is now completely gone”.

“We ask for continued prayers and miracles,” she said. “Please share the word.”

Charlene and Mike Harber, 74 and 76

RJ Harber also told CNN that his parents, Charlene and Mike Harber, are still missing.

He believes the couple have died.

US

Generations of Texas elite in mourning over Camp Mystic tragedy

Published

33 mins ago

July 7, 2025

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Generations of Texas elite in mourning over Camp Mystic tragedy

The area around the Guadalupe River is home to dozens of summer camps, but it is Camp Mystic that was long favoured by the Texas elite.

For almost a century, the daughters of senators, presidents, and oil barons would stream through the gates each summer.

“The camp has always served as a near-flawless training ground for archetypal Texas women,” wrote Texas Monthly writer Mimi Swartz in a 2011 profile.

First Lady Laura Bush was a camp counsellor there during college, while President Lyndon B Johnson sent daughters and granddaughters through the green gates.

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Nicole Nugent Covert, granddaughter of Lady Bird and Lyndon B Johnson, described dropping her daughter off at Mystic.

“You get a feeling when you drive up to the Hill Country and you’d see the Mystic sign, and you’d feel the weight of the world had been lifted off you,” she told the Austin American-Statesman in 2010.

“There were no worries. I still feel that way. When I drop my daughter off, I’m jealous.”

Once inside the Christian camp, hundreds of girls would learn to ride horses, catch fish, and hunt. They wore white on Sundays, when fried chicken was also served.

The halcyon summer days would culminate in a war-canoe race between two competing “tribes”.

A deposit for the camp cost $400 – while the current full fee is unknown in 2011 it cost $4,300 (£3,150) for a 30-day session.

Camp director dies ‘saving girls’

Founded in 1926, the camp was bought by Agnes Doran Stacy, a Dallas socialite, and her husband, Pop, in 1939, and has stayed in the family for the next three generations.

Mystic’s family bond came under pressure in 2011 when the Eastland siblings – grandchildren of Agnes – got into a messy legal battle over the 725-acre camp. The family eventually reached a confidential settlement in 2012.

Current director Dick Eastland, who ran the camp alongside his wife Tweety, has been confirmed dead by his grandson. George Eastland said his grandfather died trying to save the girls in his care when the flash floods suddenly hit.

At first, 27 of the camp’s girls were missing, their cabins swept away in waters that rose suddenly at 4am. That figure is now 11 – 10 campers and one counsellor.

Renee Smajstrla, Eloise Peck, Janie Hunt and Lila Bonner are among those confirmed to have died.

“She will forever be living her best life at Camp Mystic,” Renee’s uncle, Shawn Salta, wrote in tribute to her.

The ‘Mystic mafia’ mourns

In her 2011 article, Swartz described a “Mystic mafia” of women that stretched across the world, their bonds forged by summers at camp.

And those legions of women are mourning today.

“Camp Mystic has been my safe haven for years – a place of peace, joy, and true belonging,” one wrote on social media.

“It’s where light lives and God’s love overflows. A true slice of Heaven on earth. This weekend, tragedy has struck this sacred space, and my heart is shattered.”

“Mystic gave me more than I really know how to put into words. my heart breaks for the campers, staff, and their families in this impossible time,” another wrote.