--- title: The Fed Just Raised Interest Rates Again Despite Recent Bank Failures. Here's What It Means for You description: The Federal Reserve announced another quarter-point interest rate hike despite recent bank failures. Here's what that means for you. authors: - name: Sarah Hansen role: Senior Writer url: https://money.com/author/sarah-hansen/ bio: Sarah Hansen is a senior writer at Money covering all things personal finance. Previously, she covered economic policy and capital markets on the breaking news desk at Forbes. education: Northwestern University, New York University at_money_since: 2021 articles: 347 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Education - Health and Wellness - Housing - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes social: - https://www.linkedin.com/in/sarah-m-hansen/ former_staff: true editors: - name: Mallika Mitra role: Contributing Editor url: https://money.com/author/mallika-mitra/ bio: Mallika Mitra is a contributing editor for Money, based in Chicago. She has covered investing and retirement for seven years and her work has appeared in CNBC, Bloomberg, Kiplinger, AARP, Barron’s, Bankrate, The Daily Upside, ETF.com, The Bond Buyer, PLANADVISER, PLANSPONSOR and Investopedia. education: Craig Newmark Graduate School of Journalism at CUNY Kalamazoo College at_money_since: 2020 articles: 395 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - CNBC - Bloomberg - Kiplinger - Barron's - Bankrate - WGN-TV - CBS News Radio - This Morning With Gordon Deal - Everyone's Talkin' Money social: - https://twitter.com/mitra_mallika - https://www.linkedin.com/in/mallika-mitra-4577a386/ published: '2023-03-22T19:28:46.000Z' modified: '2024-01-10T14:38:55.000Z' section: Economy and Politics tags: - News - stocks word_count: 754 canonical: https://money.com/fed-interest-rate-hike-march-2023/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Jerome Powell in a conference](https://img.money.com/2023/03/News-Fed-Decisions.jpg) It’s official: Interest rates are rising again **—** but the end of hikes may be in sight. On Wednesday, the Federal Reserve announced another quarter-point rate hike, bringing the target federal funds rate to between 4.75% and 5%. That benchmark rate impacts everything from credit card APRs to auto loans to mortgage rates. It’s the ninth consecutive time the central bank has raised rates in an attempt to bring down inflation and cool the economy. [Consumer price growth](https://money.com/february-2023-inflation-prices-climbing/) has slowed somewhat since peaking at 9% in June, but the latest reading of 6% in February is still too high for the Fed’s liking. That's not to mention the fact that measures of hiring and consumer spending are actually *higher* than experts think they should be, which indicates an economy in danger of overheating. In a press conference on Wednesday, Federal Reserve Chair Jerome Powell noted that the labor market remains very tight, and that “the process of getting inflation back down to 2% has a long way to go and is likely to be bumpy.” Here’s everything you need to know about what the latest interest rate increase means for you. ## Interest rates are rising despite bank concerns The Fed’s decision came after two weeks of [turmoil in the banking sector](https://money.com/bank-failures-explained-questions-answers/) following the collapse of Silicon Valley Bank **—** the second-largest bank failure in U.S. history. The bank was taken over by regulators amid a historic run on deposits, which sparked panic across the industry. Some experts worried that hiking rates this week could open the door to even more instability, while others said the central bank was unlikely to go ahead with unexpected change in policy. Since most investors were expecting a rate hike this week, the worry was that deviating from that expectation would rattle the stock market, and also give the impression that the Fed isn't confident in the banking system. “The Fed does not like to surprise markets,” Ian Shepherdson, chief economist at Pantheon Macroeconomics wrote in a research note on Tuesday. The Fed acknowledged in its [statement](https://www.federalreserve.gov/monetarypolicy/files/monetary20230322a1.pdf) on Wednesday that the recent banking turmoil is "likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation," but added that the magnitude of these effects is not yet clear. In the meantime, the Fed says it is "highly attentive to inflation risks." It also signaled that just one more quarter-point rate hike is on the docket this year, though that could change as economic conditions evolve. ## What higher interest rates mean for you Raising the federal funds rate makes it more expensive for banks to borrow money from each other. Many then raise rates on consumer lending products to make up the difference. Your [credit card](https://money.com/best-credit-cards/) APR may rise, for instance, so you should expect to pay a little more in interest if you’re carrying a balance on your credit card. Rates for new [mortgage loans](https://money.com/best-mortgage-lenders/) and [auto loans](https://money.com/best-auto-loan-rates/) also tend to move with the fed funds rates (though they aren’t directly correlated). With rates still climbing, its a good time for consumers to evaluate their high-interest debt. You may want to pay off your credit card in full every month (or consolidate your balance to a card with a relatively low APR). On the flip side, many banks also raise interest rates on [high-yield savings accounts](https://money.com/best-high-yield-savings-accounts/) when the benchmark interest rates rises. Some online banks are now offering rates between 4% and 5% — a huge change compared to a year or two ago. ## What higher interest rates mean for the stock market In general, higher interest rates tend to weigh on the prices of financial assets like [stocks](https://money.com/how-to-buy-stocks/) and [bonds](https://money.com/buying-bonds-great-investing-move/). Stocks have also been depressed amid concerns in the banking sector. While stocks ticked upwards in the immediate aftermath of the Fed's announcement, no one has a crystal ball when it comes to the market. "We see considerable uncertainty in the path ahead," Ashish Shah, chief investment officer of Goldman Sachs’ Public Investing Business, said in written commentary shared with Money on Wednesday. During turbulent periods like this one, experts usually recommend sticking with your existing investment plan — that’s true even if stocks continue falling in the wake of the Fed’s decision. ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/fed-interest-rate-hike-march-2023/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Economy and Politics", "item": "https://money.com/economy-and-politics/" }, { "@type": "ListItem", "position": 3, "name": "Federal Reserve", "item": "https://money.com/federal-reserve/" }, { "@type": "ListItem", "position": 4, "name": "The Fed Just Raised Interest Rates Again Despite Recent Bank Failures. 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