Yellen: Fed may have less need to raise interest rates further

U.S. banks are likely to become more cautious after recent bank failures and may tighten lending further, Treasury Secretary Janet Yellen said on Friday. Banks are likely to become more cautious and may tighten lending further after recent bank failures, possibly eliminating the need for further rate hikes by the Fed. Policy measures taken to stem the systemic threat posed by the failures of Silicon Valley Bank and Signature Bank last month have stopped deposit outflows and “everything is calm,” Yellen said in an interview. “Banks are probably going to be a little bit more cautious in this environment. We saw some tightening of lending standards in the banking system prior to this event and there could be more to come,” Yellen said in the interview scheduled to be broadcast Sunday. She said that would lead to a credit squeeze in the economy that “could replace the further rate hikes that the Fed needs to do.” But Yellen said she didn't see anything "dramatic enough or significant enough" in this area that would change the economic outlook.