The recent stress in the banking sector could reduce the ability of U.S. banks to lend over the next year, and materially lower U.S. economic growth, the International Monetary Fund said Tuesday.
The IMF estimated said that lending capacity in the U.S. could fall by almost 1% in the coming year.
That would reduce U.S. real gross domestic product by 44 basis points over that time frame, all else being equal, the IMF said.
The U.S. economy was only expected to grow marginally even before the bank sector stress of mid-March.
According to the latest estimate from the Federal Reserve, the U.S. economy is only expected to grow 0.4% in 2023 and at a 1.2% rate next year.
Economists think a tightening of credit conditions will play a key role in how much more the Fed raises interest rates.
On Monday, New York Fed President John Williams said there are no clear signs yet of a credit crunch.
U.S. stocks
DJIA,
SPX,
opened little changed on Tuesday as did Treasury yields.
This post was originally published on Market Watch
