News from the Associated Press on April 17 (edited by Liu Rui)U.S. Treasury Secretary Yellen said on Saturday that the U.S. banking industry may become more cautious after the recent turmoil and crisis in the U.S. banking industry and may further tighten lending. With that outlook, the need for further Fed rate hikes may have disappeared.
U.S. banks may tighten credit
In an interview, Yellen said that in order to curb the systemic threat posed by the failure of Silicon Valley Bank and Signature Bank last month, the US government has taken a series of policy actions that have stabilized the outflow of deposits from the US banking industry. Get calm.”
Yellen said: “In this environment, banks may become more cautious. Before this, we have seen some tightening of lending standards in the banking system, and there may be further tightening in the future.”
She argued that this would lead to constrained credit in the U.S. economy and “could replace the Fed needing to raise rates further.”
But Yellen said she hasn’t seen “dramatic enough or significant” changes in this area to change her outlook on the economy.
“So I think the outlook (for the U.S. economy) remains one of moderate growth, continued strength in the labor market and lower inflation,” she said.
Yellen is far from the only fiscal official who expects credit to U.S. banks to contract somewhat due to financial sector turmoil last month. Some Fed officials have also said in recent days that the central bank should take a more cautious stance because they expect banks to limit lending in the coming months.
Weekly bank balance sheet data released by the Federal Reserve showed that U.S. bank loans have not yet materially deteriorated, and also showed that despite a period of heavy withdrawals in the U.S. banking industry around the mid-March bankruptcy of Silicon Valley Bank and Signature, Deposit outflows have stabilized over the past two weeks.
Dollar dominance is at risk
Yellen also discussed the Russia-Ukraine conflict, dollar dominance and other issues in the interview.
With regard to the conflict between Russia and Ukraine, Yellen believes that the US-led sanctions and export control measures against Russia have effectively restricted Russia and turned Russia’s originally expected budget surplus into a deficit.
At the same time, when asked whether the sanctions would weaken the dollar’s status as the world‘s reserve currency, Yellen acknowledged that there are indeed potential risks.
“So when we use financial sanctions in relation to the role of the dollar, there’s a risk that over time it could undermine the hegemony of the dollar but it’s an extremely important tool that we’re trying to use wisely,” she said. .”
Yellen also mentioned that while an alternative to the U.S. dollar could emerge in the future, it would be “not easy” to achieve because of the U.S. dollar’s unique property of being backed by the world‘s safest and most liquid asset, U.S. Treasury bonds.
“The U.S. dollar is widely used. We have very deep capital markets and the rule of law, which is critical for a currency that will be used for transactions around the world. We haven’t seen any other country that has that kind of infrastructure, the institutional infrastructure to enable its currency to serve the world as it does now.”