That could act like rate hikes on their own, further smothering the economy. The worry is that the industry’s turmoil could push banks to pull back on their lending. bank failures have come in the last two months. The banking system has felt some of the fiercest pressure from all of the Fed’s rate increases, and three of the four largest U.S. They want to have everything available to them because they really have no idea how things are going to play out.”Īlso potentially putting a downer on the market, Jacobsen said, was Powell’s repeated references to a survey soon to be released, one that will show how much loan officers at banks say they’re tightening lending standards. “They want to retain the option to cut, they want to retain the option to hike and they want to retain the option to hold. “He really seemed to jump from hawkish straight to not dovish, but chicken as far as: They don’t know what’s going to happen,” said Brian Jacobsen, chief economist at Annex Wealth Management. So instead of sounding like a “hawk,” which is what Wall Street calls policymakers who want higher interest rates, or a “dove” who favors lower interest rates, Powell may have come off as something in between.
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