US banks need higher capital levels, warns Kashkari
Banking stress may re-emerge if inflation is entrenched, Minneapolis Fed president says
The US Federal Reserve could be forced to choose between lowering inflation and maintaining banking stability, Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said on July 12.
Raising banks’ equity capital requirements now would avoid forcing the Fed to make that choice, he said.
“If inflation proves to be more entrenched than expected, policy rates might need to go higher, which could further reduce asset prices, increasing pressure on banks,” Kashkari said. “In such a
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