This Week In Credit Card News: The Pros And Cons Of A Cashless Society; Bank Failures And Interest Rate Hikes

Bank Failures Changed Fed’s Course on Rates, But in an Unexpected Way

The recent collapse of two midsize banks changed the Federal Reserve’s course of action on tightening monetary policy, but not necessarily in the way some market participants and observers expected. The Fed raised its benchmark interest rate by a quarter percentage point, a more modest hike than was expected before the failures of Silicon Valley Bank and Signature Bank earlier this month. It also indicated that it would stop raising rates sooner than it previously projected. Yet, Fed Chair Jerome Powell made clear that this slight change of course was not the result of financial stability concerns. Instead, he said, the committee felt it could pull back because the banking sector volatility that followed the failures served as its own check on inflation. [American Banker]