Fed/Williams: Banking stress could tighten credit

“The banking system is robust and resilient. However, these developments will likely lead to some tightening in credit conditions for households and businesses, which will put pressure on spending,” Williams said in a speech to an event Wednesday. I will closely monitor the development of early and credit conditions and their potential impact on the economy.”

The failure of Silicon Valley Bank last month and the resulting market turmoil forced the Fed and other regulators to take urgent action to boost confidence by providing liquidity to the broader banking sector.

“Inflation is still very high and we will use our monetary policy tools to restore price stability. It will take time for the Fed’s steps to reduce inflation,” Williams said, adding that it is highly likely that it will take 2 years for inflation to return to its 2 percent target, and that inflation will be at one percent this year. He stated that he expects it to decrease to 3.25.

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