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Powell Says Cuts This Year Are Not The Fed's Baseline Expectation

FED
  • Q: You've previously said rates would be held at sufficiently restrictive for some time, are markets wrong for pricing cuts?
    • A: The SEP today showed participants expect slow growth with inflation moving down gradually. In that case FOMC doesn't see rate cuts this year. Cuts are not our baseline expectation.
  • Q: So 5.1% will be sufficiently restrictive, or impacted by what will happen?
    • A: In terms of monetary policy we are looking at the banks and seeing if it will have a tightening on credit conditions. In a way that substitutes for rate hikes. We have to have policy to bring inflation down. It can come from tighter credit conditions. We're just going to have to watch.
  • Q: Commercial real estate market risks for smaller/regional banks?
    • A: We're well aware of concentrations that some banks have in commercial real estate, but don't think it's comparable to SVB. The banking system is strong, sound, resilient, well-capitalized. Not at all analogous top this.

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