Credit crunch fears are taking hold, fueling concerns of a crippling US recession. Here's why investors are so worried about lending drying up.
The Federal Reserve has lifted interest rates to as high as 5% from almost zero 12 months ago — the steepest jump in US borrowing costs since the 1980s — to rein in surging inflation.
from the"most vulnerable US banks" since the Fed began hiking interest rates in March 2022, according to JPMorgan.
"Admittedly, however, we don't how much the spate of bank failures which have already occurred will lead to a general contraction in credit. And my expectation is that the Fed won't starting cutting rates until December 2023, in the meantime we could see further issues," Caldwell said.The possibility of tighter lending muddies the water for the US central bank, making it difficult to gauge how much of an impact further rate hikes could have on credit and economic growth.
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