Federal Reserve raises interest rates by another 25 bps despite regional banking crisis

Federal Reserve, ECB push on with rate hikes: The Federal Reserve hiked interest rates by another 25 bps on Wednesday amid mounting signs of financial stability among the country’s regional lenders. The central bank raised the fed funds rate to 5-5.25% — the highest level since 2007 — after unanimously agreeing on the tenth hike in a little over a year, it said in a statementon Wednesday.

The end of the Fed’s aggressive tightening cycle? “That’s a meaningful change that we’re no longer saying that we anticipate [further increases],” Fed Chairman Jerome Powell said during a presser (watch, runtime: 52:00), when asked if the statement should be taken as a signal that the Fed will pause rate increases in June. “We’ll be driven by incoming data, meeting by meeting, and we’ll approach that question at the June meeting.” Headline inflation remained significantly above the Fed’s 2% target in March, rising by 5% during the month.

The Fed may almost be done, but the ECB isn’t ready to pause:One day after the Fed’s decision, the European Central Bank (ECB) announced a 25-bps hike of its own, pushing its deposit rate to 3.25%. “Headline inflation has declined over recent months, but underlying price pressures remain strong,” the bank said. “We have more ground to cover and we are not pausing, that’s extremely clear,” ECB President Christine Lagarde said during a presser (watch, runtime: 53:18).

THE CLOSING BELL-

The EGX30 was flat at Wednesday’s close on turnover of EGP 1.68 bn (5% below the trailing 90-day average). Regional investors were net buyers. The index is up 18.5% YTD.

In the green: Ibnsina Pharma (+6.4%), Taaleem (+3.2%) and Sidi Kerir Petrochemicals (+1.9%).

In the red: e-Finance (-2.3%), Oriental Weavers (-2.1%) and Orascom Construction (-2.1%).