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AMELIA ISLAND, Florida (Reuters) - The pummeling taken by bank bond portfolios during more than a year of rising interest rates fueled worries this spring after the collapse of Silicon Valley Bank that a spiraling financial crisis might soon develop and crash the U.S. economy. | 06:06am
One major bank index dropped 4.5% Tuesday to the lowest since late 2020.
From Bloomberg: Interest-rate hikes have driven unrealized losses for banks to an estimated $1.84 trillion, with trouble in commercial real estate only adding to the pain. Lenders also face the risk of deposit flight as frustrated savers leave for higher-yielding alternatives.
Beating inflation is crucial for the Federal Reserve. But so is promoting full employment. And don’t forget about preserving the stability of the financial..
By tightening financial conditions enough to curb inflation, the Fed has contributed to a spate of bank failures.