NEW YORK, March 23 — Wall Street stocks slumped Wednesday as the US Federal Reserve continued hiking interest rates to fight inflation, while noting that banking sector turmoil could weigh on the economy.
But all eyes were on the Fed as it unveiled an anticipated quarter-point rate hike, its ninth straight increase in an effort to combat stubborn price increases. Adding to jitters were comments by US Treasury Secretary Janet Yellen, who told a Senate subcommittee Wednesday that the United States was not considering a broad increase in deposit insurance.
The Fed’s quarter-point hike was in line with expectations, and matched the size of its last increase in February. Pausing the rate hikes could have sparked market worries that there was more to the banking sector’s woes than met the eye, prompting a “worse outcome,” Innes said in a note.