“The Impact of the Banking Crisis on Credit Conditions and Economic Growth in the United States”

The banking crisis tightened credit conditions

“While financial stabilization tools have helped calm conditions in the banking sector, developments in the industry on the other hand are contributing to a tightening of credit conditions and are likely to affect economic growth, employment and inflation,” Powell explained.

“As a result, we may not need to raise interest rates as much as we would have to do to achieve our targets… Of course, this ‘range’ is not very clear,” the Fed chief added.

The US central bank has raised interest rates by 5 percentage points in just over a year, as it wages its biggest tightening campaign in decades to quell soaring inflation.

The conference is being held at the headquarters of the Federal Reserve in Washington to honor the memory of former “Federal” economist Thomas Lubach, who died in 2020 at the age of 55.