The Federal Reserve (FED) warned by various risks in the economy of USAincluding the persistence of inflationpossible losses in the real-estate market and financing pressures in some banks, despite the solidity that they showed in the recent months growth and labor market data which led the consensus of analysts to rule out the possibility of a recession.
At the beginning of the year, the American financial sector turned on his alarms after they registered runs and collapses in some regional banks, impacted by the interest rate rise carried out by the monetary organization itself.
The drop of Signature Bank and Silicon Valley Bank forced federal authorities to rescue its clients’ deposits.
What did the FED’s Financial Stability Report indicate?
He Financial Stability Reportpublished last Friday by FEDto which Télam had access, is the second after these vulnerabilities, indicates that the deposit flows of the banking system have stabilized in recent months.
“However, a small group of banks continue to face pressures on financingreflecting concerns about uninsured deposits and other factors“, indicated the FED report.
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Argentine News
In USA there are close to US$7 trillion in uninsured deposits: they are about those that exceed the limit of US$250,000 of the Federal Deposit Insurance Corporation (FDIC)a state agency that automatically protects deposits less than that figure with a fund for this purpose in the event of a bank failure.
In this framework, he points out that the banking system “remains resilient” with the venture capital ratio in average levels” and “high levels of liquid assets”; but that “high interest rates are depressing the value of long-term assets and fixed rates.”
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On the other hand, the report, which cites academic and market sources, indicates that there is a biggest concern on persistence of inflationary pressures. This could lead to more restrictive monetary policy and, as a consequence, the possibility of large losses in the residential and commercial real estate market.
The organization raised its rates 11 times since March 2022taking it from levels close to zero to a range of between 5.25% to 5.5%, a monetary adjustment with a speed that has not been recorded since the seventies. However, the expectation is that in the Next meetingof the 31 October and the 1st of Novemberthe FED leaves rates unchanged againrather than an upward adjustment.
Wall Street ended mixed while awaiting Federal Reserve minutes
Finally, the document of the FED warns of some risks linked with the Global economy such as possible disruptions in the exchange of food, energy and other commodities through war between Palestine and Israel and of Russia and Ukraine; and a lower growth in China.
Regarding the latter, they pointed out that “given the size of its economic and financial system, Financial stress in China could hurt global markets through disruptions to economic activity, deterioration in risk confidence and a strong appreciation of the dollar, which could affect USA”.
Source: Ambito
