The Huge Significance of Small Banks
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The Fed Wants to Tighten Financial Conditions
The Fed had wanted to tighten financial conditions for the past year, and that this period, what's happening now with the banking sector, has tightened them almost more than a 25 basis point height. So yes, it's good that financial conditions have tightened in terms of slowing inflation down. But it's happening in some sense too quickly because it's beginning to raise the risk of financial stability. You mentioned the spreads as far as bank funding costs go. How do you see the Credit Swiss playing out? No, and the situation is evolving as we speak here.
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