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Mohamed El-Erian: We've created more moral hazard in the bank system
05:38 - Source: CNN
Washington, DC CNN  — 

The Federal Reserve voted unanimously to raise interest rates by a quarter point Wednesday, the tenth rate hike since the central bank started its battle against inflation last March.

The move comes amid ongoing fragility in the banking sector triggered partly by higher interest rates, and following the collapse of three regional banks.

The quarter-point increase brings the benchmark federal funds rate to a level of 5%-5.25%, its highest level in more than 15 years.

The Fed’s post-meeting statement re-emphasized the central bank’s commitment to bringing down inflation, but did not include a notation that “some additional policy firming may be appropriate,” which was included in its prior release. That omission leaves open the possibility for an upcoming pause in rate hikes.

With regard to timing of that pause, Fed Chair Jerome Powell said at his post-meeting press conference that the central bank would “approach that question at the June meeting.”

Support for the rate hike was “very strong across the board,” Powell said, but there was some discussion about eventually suspending rate increases.

“People did talk about pausing, but not so much at this meeting. There’s a sense that we’re much closer to the end of this than to the beginning,” Powell said. “If you add up all the tightening that’s g