WASHINGTON: As some banks are facing pressure on earnings, US Treasury Secretary Janet Yellen stated on Wednesday that it would not be surprising to see further consolidation in the banking sector.
Yellen more US bank consolidation is possible: Yellen also mentioned that banks will experience some difficulties with commercial real estate in an environment of rising interest rates and with remote work impacting demand for office space in an interview with CNBC.
However, according to the former head of the Federal Reserve, “the level of capital and liquidity in the banking system is strong,” and institutions should be able to withstand the pressure.
When asked if she supported further banking industry consolidation, Janet Yellen responded, “Certainly in this environment, some banks are experiencing pressure on earnings and there is a motivation to see more consolidation.”
She continued, “I wouldn’t be surprised if some of that continued.”
According to recent data, Yellen added that she also believes the US is heading towards lower inflation while maintaining a robust labor market. She continued by saying she anticipated more development over the next two years.
Yellen called the recent bipartisan agreement to suspend the debt ceiling and prevent a catastrophic default in the greatest economy in the world a “win for the American people.”
She continued by saying that the recent agreement to reduce the deficit and the fact that fiscal stimulus has tapered off since the epidemic ended assist the Fed’s efforts to lower inflation.
Next week, Fed members will convene for a two-day policy meeting that will end with a decision on whether to continue or halt the US central bank’s programme of interest rate increases to control inflation.