Federal Reserve Chairman Jerome Powell
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The Federal Reserve is unlikely to raise rates from here on out, KKM CEO Jeff Kilburg said.
That’s because the Fed needs to see to what degree turmoil in the banking sector will hit lending.
“They’re going to take a pause. They’re going to have to sit back and measure,” he told CNBC.
As a credit crunch mounts in the banking world, the Federal Reserve is unlikely to raise rates from here on out, KKM Financial CEO Jeff Kilburg said Thursday.
The Fed first needs to take a moment to see to what degree turmoil in the banking sector will hit lending, which is a natural form of tightening, he said.
“The Fed is done,” he told CNBC. “It’s because they can’t measure what actually is the ripple effect — what is the tightening effect — of this banking situation.”
This week, the Fed was faced with balancing its fight against inflation against worries about deposit outflows at smaller banks.
At Wednesday’s FOMC meeting, policymakers unanimously voted for a quarter-point interest rate rise, but indicated that it may be nearing an end to future increases. And Powell acknowledged that tighter financial conditions would mean the Fed doesn’t have to do as much with monetary policy.
Kilburg said the Fed has to gauge the amount by which lending has been affected. “They’re going to take a pause. They’re going to have to sit back and measure.”
Meanwhile, he added that Treasury Secretary Janet Yellen’s remarks that that there’s no need for “blanket insurance” on all US deposits as of yet indicate there’s no significant need for concern around banking.
“This is not a crisis. This is a bunch of novice bond traders mismanaging Treasury books at Silicon Valley Bank, Signature Bank, and in some of the other banks so it’s very isolated,” he said.