WASHINGTON, March 20 (Reuters) – At an early January meeting of the Virginia Bankers Association, executives were already nervous that Federal Reserve interest rate increases were making it hard to compete for deposits.
“Everywhere I go in the industry people are feeling that kind of pressure,” the featured speaker of the day, Richmond Fed President Thomas Barkin, said in response to a question from the audience. The influence of Fed rate hikes “is going to hit…That is how it is designed.”
When Fed officials meet this week the suddenly urgent question is whether the level of pressure on the banking industry has become so great it risks a larger financial crisis – the sort of event associated with deep and hard-to-arrest economic downturns – and warrants a slowdown or pause to further rate increases.
The Fed and global central banks, after a tense 10 days with banks teetering in the U.S. and Europe, launched a second round of weekend efforts to buttress the system by expanding the Fed’s ability to… Read full article