The Fed ultimately raised the benchmark federal funds rate a quarter of a point at its March 21-22 meeting, a policy gathering held less than two weeks after a tense weekend that top U.S. officials spent designing emergency measures to halt a possible deposit run against regional lenders following the failures of Silicon Valley Bank and Signature Bank.
Before SVB's March 10 failure, Powell had said high inflation might even warrant a half-point increase, so the quarter-point increase that was approved showed "that the Fed was taking the situation seriously...but also that the situation was not so dire as to prevent the Fed from following through on previously signaled tightening," the Citi analysts wrote. The minutes "will likely express confidence in the separability of price stability and financial stability.
Still, the events on that March 10 weekend added new complexity to a Fed policy debate that had been singlemindedly focused on lowering inflation from levels that last year were more than triple the Fed's 2% target.