HAMDEN, Conn. (WTNH) — Federal interest rates jumped by a quarter point on Wednesday as part of an ongoing fight to balance inflation.
The hike is the ninth increase within the last year, but could it worsen a tumultuous banking situation? The feds said in a statement that “The U.S. banking system is sound and resilient.” Mohammad Elahee, a professor of international business at Quinnipiac University, said that interest rate increase is a byproduct of interest rates remaining low for too long.
“I think Fed has already been sending this message, but they must state it more emphatically — that the government will not let any bank fail,” Elahee said. “So, that will restore confidence among investors and among depositors there will not be any panic withdrawal.”
Elahee said that raising interest rates doesn’t always work. He points to workers taking early retirement and a labor shortage as reasons why inflation rates will remain high.