Fed cites inflation and war in Ukraine as major financial risks

The Fed published the May 2022 issue of its Financial Stability Report, which includes assessments of the current situation in the American financial system.

The report said that since November last year, uncertainty about the economic outlook has increased.

Pointing out that Russia’s attack on Ukraine caused humanitarian and economic difficulties, the report stated that the effects of the war on the US and global economies were quite uncertain.

The report noted that in the near term, the war and related developments are likely to put additional upward pressure on inflation and put pressure on economic activity.

In the report, which stated that the outlook regarding the new type of coronavirus (Kovid-19) epidemic remained uncertain despite the improvement, it was emphasized that the uncertainty regarding the inflation outlook also poses a risk to financial conditions and economic activity.

“Negative surprises in inflation and interest rates can adversely affect the financial system, especially if accompanied by a decline in economic activity,” the Fed’s report said. evaluation was made.

In the report, it was stated that there was high volatility in financial markets and some pressures on market liquidity.

In the report, it was stated that bond interests have increased significantly, while stock prices have decreased.

The report emphasized that business and household debt increased last year and will likely continue to rise this year.

In the report, which pointed out that banks continue to have good capital, it was stated that some money market and bond funds are still exposed to large liquidity risks.

Several signs of funding pressure have emerged as geopolitical tensions escalate, but broad funding markets have proven to be resilient and the effects have so far been limited, the report said.

Source: STAR.COM.TR by www.star.com.tr.

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