The Federal Reserve's Chair Jerome Powell said he is keeping an eye on commercial real estate and closely monitoring the situation as it could impact the banking system. Powell said that, at least for now, the risks seem to be contained. He told journalists that there is substantial commercial real estate in the banking system, especially in the smaller banks. - The Federal Reserve expects banks with CRE loan concentrations to experience more significant losses.
- Powell believes the current challenges in the industry to be around for some time instead of something that will suddenly hit and work its way to system risk.
- He added that if conditions worsen, that would be factored into the Fed's rate decisions in the future.
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