Wednesday’s news conference was held by the Federal Reserve Chairman Jerome Powell following a meeting of the Federal Open Market Committee in Washington, D.C. Jerome Powell, Federal Reserve Chairman, spoke Wednesday at a news conference following a Federal Open Market Committee meeting in Washington, D.C. It also indicated that it would not raise rates as quickly as it had previously predicted. Jerome Powell, Fed Chair, clarified that this slight shift in course was not due to financial stability concerns. He stated that the committee could not pull back due to the volatility in the banking sector following the failures, which served as its own check against inflation. Powell stated that the events of the past two weeks will likely result in tightening credit conditions for households as well as businesses. This will, Powell said, “weigh on the labor market and inflation.” This tightening would result in a decrease in financial conditions that would affect rates. In principle, it could be compared to a rate increase, or possibly more. He noted that the exact impact of the episode is not known until a while and stated that the Fed would monitor the fallout and respond accordingly. Powell reiterated that the Fed believes the banking system is sound, resilient and has strong capital. Powell also stressed that the failures of the two banks were not a reflection of wider problems in the banking system. Powell stated that the management of Silicon Valley Bank failed at a basic level. They grew the bank quickly and exposed it to significant liquidity risk. They also exposed the bank’s interest rate risk. [They] didn’t hedge that risk. He also said that Silicon Valley Bank experienced an “unprecedented bank run” of $42 billion in less time than two days. This contributed to its uniqueness. He also noted that Silicon Valley Bank, a Santa Clara, California-based bank, experienced an “unprecedented” bank run of $42 billion in less than two days, which contributed to its unique situation. History has shown that isolated bank problems can undermine confidence in healthy banking systems and threaten the ability to support the savings and credit needs for households and businesses. Powell briefly spoke about the Fed’s ongoing internal review on its supervision of Silicon Valley Bank. He stated that his primary interest is to determine “what went wrong” and “why.” Powell declined to comment on the findings of the Fed’s ongoing review of its supervision actions around Silicon Valley Bank. He did however acknowledge that the episode would likely lead to reforms in the way banks are capitalized and monitored. Powell said he would support any recommendations from Barr’s review. Powell stated that he expects there to be recommendations in the report and that he will support them and their implementation. The Fed’s latest rate increase raises its target range from 4.75% to 5%. The FOMC’s 11 voting members unanimously voted to increase the rate. However, the FOMC changed its forward-looking guidance to say that “ongoing rate hikes will be appropriate to reduce inflation” and instead suggested that “some additional policy firming may prove to be appropriate.” Powell explained that Powell was trying to reflect uncertainty about what would happen. “It is possible that this [crisis] may have very modest effects… on the economy. In which case, inflation would continue to be strong. In which case, the path forward might look differently. He said that it is possible that this will lead to tightening credit conditions over the long-term, which would mean that monetary policy might have less work to do. “We don’t know.”