Press conference exchange between MARK HAMRICK and Fed Chair Jerome Powell:

user: Thank you, Mr. Chairman. Mark Hamrick with Bankrate. Wondering what your thoughts are now about systemic risk now that we’re about three months past the failure of Silicon Valley Bank. And also, specifically, what are the risks associated with commercial real estate as well as nonbank financials? And could you further elevate those risks with higher still rates, possibly for longer?

assistant: So I’m trying to think where to start. I’ll start with commercial real estate. We—of course, we’re watching that situation very carefully. There’s a substantial amount of commercial real estate in the banking system. A, a large part of it is in smaller banks. It’s well distributed—to the extent it’s well distributedthen, then the system could, could take losses. We do expect that there will be losses, but they’ll be—they’ll be banks that have concentrations, and those banks will experience larger losses. So we’re well aware of that. We’re monitoring it carefully. You know, it feels like—it feels like something that will be around for some time, as opposed to, you know, something that will suddenly hit and, and, you know, work its way into systemic risk. In terms of nonbank financials—financial sector—there’s been a ton of work. And, you know, clearly in the—in the pandemic, it really was—it was the nonbank financial sector where, where issues really arose. And, you know, there’s a lot of work going on in—with the Administration, in particular, leading that to try to address issues in the Treasury market and, and in all kinds of areas in the nonbank financial market. And—but, you know, our jurisdiction at the Fed is over banks—actually bank holding companies and some banks. So that’s, that’s really our main focus. You know, in terms of the events of March—as I mentioned earlier, we will be carefully monitoring that situation. You know, our, our job generally involves worrying about a lot of things that may go wrong, and that would include the banks. It might be hard for me to identify something that we don’t worry about rather than that we do worry about. So we’re watching those things very carefully. And as we see things unfold—as we see what’s happening with credit conditions and, and also all the individual banks that are out there, you know, we’ll be able to take, to the extent it’s appropriate, we can take, if they’re macroeconomic implications, we can take that into account in our rate setting. And so I guess that’s what I would say.

user: Can I just follow up on the last part of that? Do you—do you risk further exacerbating those issues if you get up to another 50 basis points?

assistant: So that’s—and, and I was—I guess I meant to address that by saying as we—as we watch, we’ll see what’s happening. And if we—if we’re seeing the tightening of conditions that, that you could be referring to, then we can factor that—because really, we’re—we use our—our rate tool is, is, you know, is—it really has macroeconomic purposes. So we’ll, we’ll take that into account. Of course, we have responsibility for financial stability as well. And that also is a factor that we’re always going to be considering. Thank you very much.