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Banks’ Pullback on Lending Could Do Some of Fed’s Work

“Banks are likely to become somewhat more cautious. That does tend to lead to somewhat greater restriction in credit that could be a substitute for further interest-rate hikes that the Fed needs to make.”

By Christopher Condon | April 17, 2023 at 01:58 PM
Janet Yellen

Treasury Secretary Janet Yellen said U.S. lenders may pull back on credit in the wake of recent bank failures—enough to do some of the Federal Reserve’s work for it, but not enough to significantly change her economic outlook.

“Banks are likely to become somewhat more cautious in this environment,” Yellen said in an interview on CNN’s Fareed Zakaria GPS scheduled to air on Sunday. “That does tend to lead to somewhat greater restriction in credit that could be a substitute for further interest-rate hikes that the Fed needs to make.”

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