Fed Stands Pat as Inflation Fight Drags On
The Federal Reserve left interest rates unchanged and signaled that a recent lack of progress on the inflation front calls for borrowing costs to remain high.
One year has passed since Silicon Valley Bank’s downfall—an event that preceded the collapse of two other regional banks, the UBS takeover of Credit Suisse, and fresh volatility across financial markets. More recently, shares of New York Community Bancorp have fallen sharply this year amid concerns over the health of its balance sheet, rekindling fears over the broader impact on the banking sector as tighter financial conditions squeeze some commercial borrowers.
While contagion has been largely averted since the SVB crisis, the policy picture in Washington is still developing. Regulators continue to take a closer look at liquidity risks in the banking sector and beyond, including the role that social media could play in triggering a bank run. The day-to-day supervision of banks has already seen changes, and regulators appear likely to create a wider proposal to address potential fault lines that have come into view over the last year. Deposit insurance has been another subject of policy proposals, with some lawmakers favoring an increase to the FDIC’s limit of $250,000 per depositor—a topic that has received attention on Capitol Hill previously. In a new video, PGIM Fixed Income Chief US Economist Tom Porcelli and PGIM Head of Government Affairs James Sonne update investors on what to expect going forward.
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The Federal Reserve left interest rates unchanged and signaled that a recent lack of progress on the inflation front calls for borrowing costs to remain high.
The US economy grew at a slower pace in the first quarter while price pressures held firm, further complicating the outlook for central banks.
Iran’s missile and drone attack on Israel drew renewed attention this week to an apparent rise in geopolitical risks.