The Federal Reserve chair has lots of tools but a very tough challenge before him
, commercial real estate enter a crisis phase, and crypto get boring again. But inflation is coming down, and on Friday, the unemployment actually fell to 3.4 percent after employers added 253,000 jobs.
So far, the extent of the Fed’s bank management after the crash of Silicon Valley Bank in March is in special lending programs, which have given out hundreds of billions of dollars in cash and emergency loans so far. As a matter of economic policy, it is almost tweaking at the margins. This was supposed to not only keep banks from crashing but return them to their normal business operations of lending.
But this week, it feels as though everything has changed. Things are moving so quickly right now that the consequences of the Fed’s actions, or inactions, could be profound. The central bank has expansive powers to lend during emergencies — think of the bailouts of 2008 or the Paycheck Protection Program in 2020. It also has the power to require banks to hold more money in reserves, essentially cushioning against shocks.
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