Last Update: April 20, 2023, 01:36 AM IST
In this photo taken on March 16, 2023, the logo of Silicon Valley Bank (SVB) can be seen through broken glass. REUTERS/Dado Ruvik/Illustration – RC23VZ9D0BXO
According to the book, the condition of New York’s financial sector “deteriorated rapidly with recent stress in the banking sector”.
Lending has declined in recent weeks in many parts of the United States, the Federal Reserve announced on Wednesday, amid financial sector troubles triggered by the rapid collapse of Silicon Valley Bank (SVB).
In recent weeks, the Fed announced in its regular report on economic conditions, known as the Beige Book, that “loan volumes and demand for loans generally declined across consumer and business loan types.”
“Many districts noted that banks have tightened lending standards amid growing uncertainty and concerns about liquidity,” the Fed said.
According to the book the condition of New York’s financial sector “deteriorated rapidly with recent stress in the banking sector”.
The collapse of the SVB on March 10 after excessive interest-rate risk-taking had a snowball effect in financial markets as concerned investors looked for signs of weakness in the broader banking sector in the US and Europe.
Another US regional bank failed after SVB’s collapse, while Swiss banking giant Credit Suisse was among the worst hit days later after regulators pushed it to merge with its bitter rival, UBS.
Regulators on both sides of the Atlantic acted swiftly to stop the outflow of bank deposits by concerned customers.
A month later, the dramatic intervention by regulators has paid off, with the market operating with far less volatility than in the days following the collapse of SVB, according to the Wix Volatility Index.
The Fed’s beige book also found that the elevated employment growth seen in recent months has moderated somewhat, with several Federal Reserve districts reporting slower growth. However, the wage increase remains.
There was a modest increase in the level of prices, according to the Fed, although it noted that “the rate of price increases is slowing.”
Inflation has remained above the Fed’s long-term target of 2 percent despite an aggressive campaign of monetary tightening, which has not seen interest rates rise to levels since the global financial crisis.
According to the Fed, there was little change in overall economic activity in recent weeks.
read all latest business news, tax news And stock market update Here
(This story has not been edited by News18 staff and is published from a syndicated news agency feed)
