2023-06-16 17:15:00
The U.S. Federal Reserve said tightening U.S. credit conditions following the March bank failures might weigh on economic growth. He said the extent of further monetary tightening would depend on the data as it becomes available.
In its semiannual monetary policy report released on Thursday, the Federal Reserve said, “The Federal Open Market Committee (FOMC) will continue to discuss the extent of additional policy tightening it deems appropriate to bring inflation back to 2% over time. “We will make a decision on a meeting-by-meeting basis, taking into account the overall picture of the data we receive and the implications they have for the outlook for economic activity and inflation.”
“Returning inflation to 2% will likely require a period of below-potential economic growth and some softening in labor market conditions,” it said.
The monetary policy report was released on the Fed’s website ahead of Fed Chairman Jerome Powell’s testimony before the House Financial Services Committee on Wednesday. The chairman will testify before the Senate Banking Committee on Thursday.
“Recent stress in the banking sector and related concerns regarding deposit outflows and funding costs have led to tightening and prospects for tightening lending standards and terms at some banks,” the Fed said in a statement. There is evidence to suggest.”
Credit tightening is likely to be greater in “sectors that are highly dependent on bank credit, such as commercial real estate and small businesses,” he said.
news-rsf-original-reference paywall">Original title:Fed Says Tighter Credit Conditions to Weigh on US Growth(excerpt)
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