Federal Reserve staff projects "mild recession" after banking sector turmoil

The intrigue: According to the minutes from the March 21-22 meeting, "several" Fed officials considered whether to hold rates steady after the banking turmoil to assess further fallout.

• But ultimately those officials, who are not named in the minutes, voted to move forward with another increase. They noted that extraordinary government actions to backstop the banking system had "helped calm conditions in the banking sector and lessen the near-term risks to economic activity and inflation."

Catch up quick: At the policy meeting, Fed officials agreed to raise rates for the ninth consecutive time by a quarter-percentage point.

• That decision concluded an eventful few weeks in which hotter-than-expected jobs and inflation data briefly opened the door to a larger, half-percentage point rate hike.
• Some Fed officials, according to the minutes, said that move may have been appropriate "in the absence of the recent developments in the banking sector."

Between the lines: At the time of the meeting, Fed staff projected that the economy would enter a "mild recession" later this year before recovering over the next two years, according to the minutes.

• That's a shift from recent months, where staff just expected slower growth and "some softening" in the labor market — conditions that would allow the economy to dodge a recession.
• That is largely due to what Fed staff expects to be lingering effects from the banking crisis, including the possibility of a "credit crunch" where banks pull back on lending.