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Persistent inflation risk and potential for real estate losses a worry in Fed report on banks

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The banking sector remained “sound and resilient overall,” but some banks were facing “sizable” losses as the increase in interest rates had led to declines in longer-maturity, fixed-rate assets, the Fed said

A Federal Reserve survey of financial stability risks released Friday showed growing concerns of persistent inflation and the potential for real estate losses.

Roughly 75% of all survey participants mentioned persistent inflation and real estate valuations, up from about 50% in the prior survey in March, the Fed said.In the most recent survey, respondents were attentive to risks posed by economic weakness in China. The survey had ended before the attack on Israel by Hammas.

“A subset of banks continued to face funding pressures, reflecting concerns over uninsured deposits and other factors,” the Fed said. The Fed reported noted that prices for homes and commercial properties remained high relative to fundamentals.

 

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Fed funds futures traders pull back on likelihood of Fed rate hike by December and JanuaryVivien Lou Chen is a Markets Reporter for MarketWatch. You can follow her on Twitter vivienlouchen.
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