{"id":4116,"date":"2023-05-04T10:42:16","date_gmt":"2023-05-04T14:42:16","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/powell-says-banking-system-sound-and-resilient-try-telling-that-to-pacwest-investors\/"},"modified":"2023-05-04T10:42:17","modified_gmt":"2023-05-04T14:42:17","slug":"powell-says-banking-system-sound-and-resilient-try-telling-that-to-pacwest-investors","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=4116","title":{"rendered":"Powell Says Banking System \u2018Sound and Resilient.\u2019 Try Telling That to PacWest Investors."},"content":{"rendered":"
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Just hours after Federal Reserve Chairman Jerome Powell reassured the public that the U.S. banking system remains \u201csound and resilient,\u201d another regional bank\u2014PacWest Bancorp\u2014was hurtling toward danger.<\/p>\n

Shares in the Beverly Hills-based bank plunged as the company confirmed it was evaluating all options and was in discussions with partners and investors.<\/p>\n

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It\u2019s been a tumultuous time for regional banks, what will it take for the phrase \u201csound and resilient\u201d to be taken out of circulation once and for all?<\/p>\n

The Fed is aware of, and monitoring, the potential economic consequences of the bank turmoil but the growing number of bank collapses doesn\u2019t seem to be enough for it to change course. Powell closed the door on rate cuts anytime soon, although a pause is now largely expected in June.<\/p>\n

The central bank\u2019s monetary policy committee acknowledged that tighter credit conditions, as a result of the recent banking stress, are likely to hit households and businesses\u2014weighing on economic activity, hiring, and inflation.<\/p>\n

Perversely, that impact would actually help the Fed in its mission to bring down inflation. But the severity of the slowdown is still very much in the balance.<\/p>\n

Powell thinks avoiding a recession is more likely than the prospect of one. Markets seem to disagree somewhat\u2014pricing in a rate cut as early as September, according to CME\u2019s FedWatch tool. That suggests expectations for a sharper downturn than the one predicted by the Fed.<\/p>\n

Another key takeaway from the Fed\u2019s meeting is the central bank is adopting a more data-dependent approach to whether further hikes are needed. <\/p>\n

Friday\u2019s jobs data take on greater importance now as investors look for more evidence that a pause is coming\u2014and that a recession can be avoided.<\/p>\n

\u2014Callum Keown<\/em><\/p>\n

*** Join Barron\u2019s deputy editor Alex Eule and senior technology writer Tae Kim today at noon when they discuss the outlook for tech companies and individual stocks. Sign up here.<\/em><\/p>\n

Try your hand at this morning\u2019s Barron\u2019s crossword puzzle and sudoku games. For all games, including a digital jigsaw based on the week\u2019s cover story, click here.<\/em><\/p>\n

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Powell Hints Fed Might Be Nearly Done With Current Hikes<\/h6>\n

After Federal Reserve members unanimously voted to lift the bank\u2019s benchmark interest rate by another quarter percentage-point, Fed Chairman Jerome Powell indicated they might be nearing a pause on further increases. It all depends on incoming data.<\/p>\n