According to a Federal Reserve report released on Monday, mid-sized institutions' turmoil led to banks tightening their lending standards to households and businesses, which could pose a threat to the US economic growth.
The report, called the Senior Loan Officer Opinion survey, revealed that banks had made it tougher to get commercial and industrial loans, mortgages, home equity lines of credit, and credit cards. Respondents expect the situation to persist over the next year, primarily due to reduced expectations for economic growth and concerns about deposit outflows and decreased risk tolerance.
The survey also showed that demand weakened across most categories. Even with the banking troubles, the central bank decided to raise interest rates for the 10th time since March 2022. However, the Fed's economists warned in March that a shallow recession was likely later in the year due to the tightening standards resulting from the banking problems.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.