Ticker: State revenues collapse in April; Fed hikes key rate, hints pause ahead

State tax revenues collapsed well below expectations in April, shifting the year-to-date performance from about $870 million in the black to, by one measure, $703 million in the red.

The Department of Revenue announced Wednesday it brought in $4.782 billion in April 2023, typically the strongest month of the year for tax collections. That’s $2.163 billion less than in April 2022, a drop of 31.2%, and $1.435 billion or 23.1% below the most recent benchmark projection for the month.

Through 10 months of fiscal year 2023, Massachusetts has now collected $703 million less than executive and legislative budget chiefs originally expected to haul in by this point when they first crafted benchmarks for the cycle, a reversal from the roughly $870 million above original benchmarks the state reported through March.

Fed hikes key rate, hints pause ahead

The Federal Reserve reinforced its fight against high inflation Wednesday by raising its key interest rate by a quarter-point to the highest level in 16 years.

But the Fed also signaled that it may now pause the streak of 10 rate hikes that have made borrowing for consumers and businesses steadily more expensive.

In a statement after its policy meeting, the Fed cut any reference to potential future rate hikes and instead said it will consider a range of factors in “determining the extent” to which future hikes might be needed.

The Fed’s rate increases since March 2022 have more than doubled mortgage rates, elevated the costs of auto loans, credit card borrowing and business loans and heightened the risk of a recession.

Home sales have plunged as a result. The Fed’s latest move, which raised its benchmark rate to roughly 5.1%, could further increase borrowing costs.

from Boston Herald https://ift.tt/54byse1