The stress in the U.S banking system will likely result in lower consumer spending, said New York Fed President John Williams on Friday.
In a speech at Housatonic Community College, Williams said the problems in the banking sector will cause banks to tighten credit. This, in turn will cause households and businesses to reduce spending.
“The magnitude and duration of these effects, however, is still uncertain,” Williams said.
Williams said he will be “particularly focused” on assessing the evolution of credit conditions on the outlook for economic growth, employment and inflation.
Boston Fed President Susan Collins said Thursday that tighter lending standards may partially offset the need for additional Fed interest rate increases.
In his remarks, Williams said inflation remains a top concern.
were up in late-day trading on Friday. The yield on the 10-year Treasury note
fell to 3.5%.