Senator Robert Menendez | Senator Robert Menendez Official U.S. Senate headshot
Senator Robert Menendez | Senator Robert Menendez Official U.S. Senate headshot
WASHINGTON, D.C. – U.S. Senator Bob Menendez (D-N.J.), a senior member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, during a hearing titled 'The Semiannual Monetary Policy Report to Congress’ pressed Jerome Powell, the Chairman of the Board of Governors of the Federal Reserve System, about his statement that inflation has not responded to rate hikes.
“After announcing the rate hike pause last week, you said that inflation has not reacted much to the Fed’s past hikes. And I’ll admit I’m a bit puzzled by that statement. The Fed’s first rate hike was in March of last year, when non-core inflation was at 8.6 percent. It’s now 4 percent, and core inflation has fallen as well,” said Sen. Menendez. “So that sounds like progress to me, especially when you consider that the according to the San Francisco Federal Reserve it can take more than a year for tax rate hikes to take full effect, which means that so far only three of the ten rate hikes since last year are in full effect.”
The Senator also highlighted the large amount of commercial real estate mortgages that will be due in the next two years, most of which are held by smaller banks. Rising interest rates and increased vacancies have dramatically driven down the price of commercial real estate, leading the Senator to ask if we may see banks fail as these mortgages come due. Sen. Menendez concluded by inquiring about what can be done to prevent the failure of these banks, and if there’s any way to ensure potential losses in commercial real estate do not result in a drain of resources from small and mid-sized banks to large ones. Such losses would further consolidate the banking sector and could potentially bring the country back to the economic climate of 2008.
“Politico recently reported that almost $1.5 trillion in commercial mortgages will come due in the next two years, many of them held by small and regional lenders. With property values declining and interest rates rising, these mortgages could be serious liabilities for many banks,” said Sen. Menendez. “I’m concerned that it’s a ticking time bomb...I don’t want to be back to 2008 when I was here and was asked to do extraordinary things.”
Original source can be found here.
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