According to the minutes of the March meeting of the Federal Reserve, the US central bank's economists projected a "mild recession" at the time when the bank decided to increase interest rates. The minutes also revealed that members of the Federal Reserve's policy-setting committee unanimously voted to raise its benchmark lending rate to between 4.75% and 5% to counterbalance high inflation and avoid further banking sector turbulence. The FOMC statement added that "some additional policy firming may be appropriate" to bring inflation down to the Fed's target of 2%. The minutes also showed that several participants had considered holding interest rates steady because of the turbulence in the banking sector caused by the Silicon Valley Bank's collapse.
Since the Federal Reserve's decision, the personal consumption expenditures price index (PCE) has slowed to an annual rate of 5% in February, showing improvement in the economic picture. Despite the receding of market turbulence, core PCE inflation, which excludes volatile food and energy prices, remained elevated, indicating that the central bank has more work to do. The market is expecting a further 25 basis point hike in interest rates at the next Federal Reserve meeting in May.
