The worst banking crisis since the Great Recession could severely tighten credit for U.S. households and businesses, taking a toll on economic growth.
The turmoil that has engulfed the financial system following the stunning collapse of Silicon Valley Bank and Signature Bank has raised the prospect among economists that lending standards will become drastically more restrictive in coming months.
“Tighter conditions can happen and occur outside the official tightening of the Fed funds rate. There are so many other variables,” Jeffrey Roach, chief economist at LPL Financial, told FOX Business. “A banking crisis, in essence, can tighten conditions… I think it’s fair to say that the current banking crisis could also be an equivalent to say, a 50-basis-point rate hike.”
Source : US banking crisis could spark credit crunch for households: What you need to know