U.S. Treasury Secretary Janet Yellen said banks are likely to become more cautious and may tighten lending further in the wake of recent bank failures.
U.S. Treasury Secretary Janet Yellen speaks during a news conference at the Treasury Department in Washington, U.S., April 11, 2023.said banks are likely to become more cautious and may tighten lending further in the wake of recent bank failures, possibly negating the need for further Federal Reserve interest rate hikes.
She said that would lead to a restriction in credit in the economy that "could be a substitute for further interest rate hikes that the Fed needs to make." Yellen is far from the only finance official expecting some retrenchment in bank credit as a result of the financial sector upheaval in the last month. Some Fed officials have said the U.S. central bank should adopt a more cautious footing as they expect banks to restrict lending in the months ahead.
"There are important pros ... and there are some cons with such a decision, so it's one that needs to be seriously analyzed, but it could be something that is in Americans' future," Yellen said.Yellen also told CNN that U.S.-led sanctions and export controls on Russia were depriving it of materials for its war in Ukraine and the $60-a-barrel price cap on Russian oil imposed by Western countries was turning Moscow's expected budget surpluses into deficits.
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