![]() central bank will follow through with its tenth consecutive rate hike. Investors in federal funds futures have followed that by raising their own expectation the U.S. Similar comments have come from across the Fed system in recent weeks, with an attitude of wariness and a more intense information flow followed by a sense that the worst problems seem to have been avoided. Are you seeing deposits leave? Are you getting elevated calls?.There was heightened alert."īut Bostic said when he asked staff if they'd heard anything out of the norm, the response was "no, we really haven't." "Our team started asking bankers lots of questions. "There was some turbulence.and it kind of worked itself out," Atlanta Fed President Raphael Bostic said in an interview with Reuters of the time following the SVB collapse. But those flows quickly stabilized, and the Fed's recent Beige Book compendium of observations about the economy showed the lending impact seemingly regionalized, not evolving into an imminent national credit crash. ![]() Overall bank credit did fall about 1.5% in the three weeks from Wednesday, March 15 to Wednesday April 5, and there were initial outflows of deposits from smaller banks to larger ones. However the fallout since then has been muted enough that Fed officials, in their final comments before a pre-meeting blackout period begins on Saturday, have swung their focus back to persistently high inflation and the need for at least one more quarter point interest rate increase. ![]() The increased monitoring has included daily checks on liquidity, Fed officials said, and a drive to be sure all banks had the paperwork ready to borrow quickly from different Fed facilities should it be necessary - signs of how seriously top central bankers viewed the collapse of SVB and the smaller Signature Bank. Since the March 21-22 meeting Fed officials say they have kept in close touch with bank executives and contacts in other industries to gauge how the dramatic collapse of Silicon Valley Bank on March 10 affected the willingness of financial firms to provide credit to businesses and households, and try to gauge if bigger problems threatened. economy and whether they decide to pause further increases. Federal Reserve officials remain set to raise interest rates at their May 2-3 meeting but key data between now and then, particularly a survey of bank lending officers, may shape how they weight the risks facing the U.S. ![]()
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