The Federal Reserve’s monetary policy committee raised the federal funds target rate by 25 basis points but indicated that it was moving to a more data dependent mode as markets digest incoming risks for banks. The Fed is balancing two economic risks: ongoing elevated inflation and emerging risks to the banking system. Chair Powell noted that near-term uncertainty is high due to these risks, as well as impacts from policy actions taken to shore up liquidity. Today’s increase of the fed funds rate moved that target to an upper rate of 5%. The Fed’s projections indicate that additional increases may be in store to achieve the level of tightening necessary to ultimately bring inflation back, over time, to the Fed’s target of 2%.