Fed's Warning of Banking Crisis Impact on US Economy and Interest Rates

Federal Reserve Chairman Jerome Powell warned that the recent banking crisis could further tighten credit for US households and businesses, impacting economic growth. The Fed has been in the midst of the most aggressive tightening campaign since the 1980s to combat high inflation. However, the implosion of Silicon Valley Bank earlier this month complicated the Fed's efforts as the rapid rise in interest rates played a direct role in the bank's failures. Policymakers said it is too soon to say how banking sector stress will affect the broader economy. Powell indicated he believes there is still a path to a so-called "soft landing," getting inflation down without triggering a recession.