Fed Chair Powell suggests possible regulatory changes after run on SVB

Bullion Bite
Fed Chair Powell suggests possible regulatory changes after run on SVB

Federal Reserve Chairman Jerome Powell has commented on the policy outlook following the decision to raise the policy rate by 25 basis points to the range of 4.75-5% in the March policy meeting. Powell stated that if they need to raise rates higher, they will, but for now, they see the likelihood of credit tightening. He also highlighted that recent liquidity provision that has increased balance sheet size is not intended to alter the stance of monetary policy.

In terms of reserve shortages, Powell commented that they do not see themselves as running reserve shortages and they are always prepared to change if that changes, but see no evidence so far. However, Powell acknowledged the recent issues with SVB, stating that their supervisory team was very much engaged with the bank and escalated issues, but they need to understand how the bank still failed.

Moreover, Powell expressed concerns about the speed of the run on SVB, which suggests the need for possible regulatory and supervisory changes. The Federal Reserve will be watching the situation carefully and is open to making changes if necessary.

Overall, Powell's comments suggest that the Federal Reserve is closely monitoring the situation and is ready to make regulatory and supervisory changes if needed to ensure financial stability.

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