Jerome Powell: Depositors’ money in the United States is “safe” and we will intervene if necessary

US Central Bank President Jerome Powell confirmed on Wednesday that depositors’ money is “safe” in US banks, while the global banking system is witnessing turmoil after the collapse of US banks.

During a press conference following the meeting of the Monetary Policy Committee, Powell said that the US banking system is solid, stressing that the Federal Reserve is “determined to take lessons” from what happened.

“We will continue to closely monitor the situation… We are ready to use all available tools and we will intervene if necessary in order to keep these funds safe,” he added.

He continued, “The problems of individual banks can threaten the banking system if they are not dealt with.”

He pointed out that “inflation is still high and we are still committed to reducing it to 2%, and measures to reduce inflation will take a long time.”

Powell revealed that the Fed’s basic expectations do not indicate a rate cut this year, adding, “We will raise interest rates at a greater rate if we need to.”

In the opinion of the Federal Reserve, the acquisition of “Credit Suisse” appeared to be a positive outcome.

The US Federal Reserve’s Open Market Committee decided on Wednesday to raise the federal funds rate by 25 basis points, to a range between 4.75% and 5%, in line with market expectations.

The Fed said in a statement that it was about to temporarily stop raising interest rates in light of the recent turmoil in financial markets, which was stimulated by the collapse of two US banks.

The US central bank added that inflation remains high, but the banking system is “sound and resilient”.

The decision was taken unanimously. With this increase, the interest rate is at its highest level since 2006.

The Fed expected that the inflation rate this year would be slightly higher than it expected in December, at 3.6% compared to 3.5%, while it expected the GDP to decline by 0.4% compared to 0.5%.

Markets are focusing on how the Fed will assess the repercussions of the banking crisis and therefore its upcoming policy to raise interest rates to protect the economy and continue controlling inflation.

The Fed raised the interest rate 7 times in 2022, in meetings during the months of March, May, June, July, September, November and December.

The Fed raised interest rates by 25 points in February 2023, while 6 more meetings remain throughout the year, and the next meeting will be on May 3.

The Fed scaled back the pace of rate hikes from 50 points last December, and 75 points in November, indicating the success of the Fed’s aggressive campaign to slow inflation.

Before the monetary tightening campaign, the interest rate in March 2022 was in the range of 0.25% to 0.50%.