During an interview with CBS News on Tuesday, Moody’s Analytics Chief Economist Mark Zandi stated that the problems in the banking industry are the inevitable result of rate hikes by the Federal Reserve where “things are going to start to wobble and break and it’s going to feel uncomfortable.” And because inflation is “still high” “the next 12-18 months are going to be uncomfortable.”
Host John Dickerson asked, “It seems weird to go back to something Powell said before all of this banking stuff, but recently, in his testimony in the Senate, Chairman Powell talked about how things were going to get bumpy after the Fed made its moves. What does bumpy mean to you and is what we’ve seen in the banking industry, is that essentially what bumpy looks like?”
Zandi responded, “That’s what bumpy looks like. … When you raise interest rates and you raise them as fast as the Fed has and as high as they have over the past year, things are going to start to wobble and break and it’s going to feel uncomfortable. And this, what we saw in the banking system over the last eight to ten days is exactly what he was talking about. It’s going to get bumpy. And I don’t think it’s over. Inflation is still high. The Fed’s still got to get inflation back in. And so, the next 12-18 months are going to be uncomfortable.”
Zandi also stated, “[T]he banking system is fragile. Everybody knows it. We had deposit runs. I don’t think it’s any surprise that the banking system is under pressure. So, let’s fess up to it and let’s make sure that the system is on solid ground. I think it is. I think what the FDIC and the Treasury and the Federal Reserve have done is adequate, but let’s just make sure.”
Reporting from Breitbart.
