Fed hikes rates again amid fragile economy

by Emily Martin - 05/03/23 5:19 PM ET

Evening Report

Wednesday, May 3

Fed hikes rates again amid fragile economy

The Federal Reserve on Wednesday, despite the threat of a recession later this year, voted unanimously to increase interest rates by an additional 0.25 percentage points in an effort to combat inflation, according to The Hill’s Tobias Burns.

The Federal Open Market Committee (FOMC), the Fed’s rate-setting committee, agreed to boost interest rates to a range of 5 percent to 5.25 percent. It is the Fed’s 10th consecutive rate hike since March 2022, pushing rates to their highest level in 16 years.

In the face of a fracturing financial sector — the collapsing of Signature Bank, Silicon Valley Bank and First Republic Bank — and the public’s fear of financial instability, the Fed sought to assuage concerns.

“The U.S. banking system is sound and resilient,” the FOMC said while also acknowledging that “tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain.”

Inflation has slowly decreased since last summer, with the annual inflation rate dropping to 5 percent in March 2023, and the broader economy as a whole has cooled.

It’s unclear what the Fed plans to do at its next meeting in June, with Chair Jerome Powell suggesting the Fed has yet to decide whether to suspend its rate hikes. Powell said the Fed would make that decision based upon the latest economic data.

“Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go,” Powell said.

Read more here

Welcome to Evening Report! I’m Emily Martin, filling in today and catching you up on the afternoon and what’s coming tomorrow.

Not on the list? Subscribe here.

CATCH UP QUICK

Federal regulators gave the green light to the first-ever vaccine to prevent the respiratory disease RSV, a major breakthrough that’s been decades in the making.
Fox host Maria Bartiromo is pushing back on claims made by an ex-producer on her show who alleges she used her personal connections to former President Trump to protect herself at the network.
Trump will attend a CNN town hall event next week in his first interview with a major network other than Fox News since he dramatically stormed off the set of a “60 Minutes” interview in October 2020. But, according to Trump aides, it likely won’t be the last time.

FIRST IN THE HILL

Jordan launches probe into lack of arrests in protests outside justices’ homes

Rep. Jim Jordan (R-Ohio), chairman of the House Judiciary Committee, launched an investigation into directions given to U.S. marshals to not arrest protesters outside Supreme Court justices’ homes after a draft decision overturning Roe v. Wade was leaked last year.

In a letter requesting information from U.S. Marshals Service Director Ronald L. Davis, Jordan questioned why training materials for marshals did not direct them to arrest protestors outside of justices’ homes and accused the Biden administration of “weaponizing” the agency for “partisan purposes.”

“The training materials provided to the U.S. Marshals strongly suggest that the Biden Administration is continuing to weaponize federal law enforcement agencies for partisan purposes,” Jordan wrote in the letter, first shared with The Hill’s Emily Brooks.

Jordan in the letter pointed to the June 2022 arrest of a man who stood outside Justice Brett Kavanaugh‘s home and threatened to kill him. But the congressman claimed “we are aware of no other arrests or charges for agitators demonstrating outside of the justices’ homes—despite the actions clearly violating federal law.”

The U.S. Marshals Service said they had received and were reviewing Jordan’s letter but had no immediate comment.

Read more about Jordan’s probe here

CYBER

Meta faces new restrictions over child privacy claims

The Federal Trade Commission (FTC) on Wednesday accused Meta of violating online privacy rules for children over how it represented capabilities of a kids’ messaging app.

The social media company, parent of Facebook and Instagram, now faces new proposed restrictions, The Hill’s Rebecca Klar reports.

The agency alleges Meta misrepresented that kids using the Messenger Kids app would only be able to communicate with parent-approved contacts, but there were circumstances in which children were able to communicate with unapproved contacts in group text chats and group video calls.

The FTC said this violated a previous order issued by the FTC, the FTC Act and COPPA, or the Children’s Online Privacy Protection Act.

Meta spokesperson Andy Stone pushed back on the allegations, saying the “two privacy incidents the FTC identified today to support their action were discovered by us, fixed, and publicly disclosed three years ago.”

Read more here

IN OTHER NEWS

NPR says Elon Musk is threatening to reassign its Twitter account

NPR said Twitter CEO Elon Musk threatened to hand access to its account to another company after the media outlet left the platform last month. NPR announced in mid-April that it would quit Twitter after the outlet gave a “state-affiliated media” label to the outlet and others. Read more here

Senate Democrats unveil China competition push 2.0

Senate Democrats unveiled a proposal Wednesday, dubbed the China Competition Bill 2.0, that limits flow of advanced technology and investment to China, domestic economic investments, support for economic allies, and deterring China from any potential conflict with Taiwan.

Republicans unveil new abortion restrictions in North Carolina

North Carolina Republicans unveiled a proposal that would ban abortion in the state after 12 weeks of pregnancy, state Senate leader Phil Berger (R) announced in a statement this week. Lauren Sforza has more details here.