By Michael S. Derby
NEW YORK, March 30 (Reuters) – Federal Reserve Chair Jerome Powell said on Monday the U.S. central bank is watching developments in the private credit sector for signs of trouble, but does not currently see issues there bringing down the financial system as a whole.
“I’m reluctant to say anything that suggests that we’re dismissive of the risk,” Powell said during an event at Harvard University. “We’re looking for connections to the banking system and things that might, you know, result in contagion. We don’t see those right now,” he said.
As for some of the issues now faced by the opaque banking sector, “there’ll be people losing money and things like that, but it doesn’t, it doesn’t seem to have the makings of a broader systemic event,” Powell said.
He noted that when it comes to private credit, “it’s a relatively small part of a very large asset pool, we’re watching it super carefully,” and that regulators are on the issue.
“We’re also getting the back story from the people who run these organizations and from all the banks,” Powell said, adding that regulators “are well aware of what the banks’ exposure is.”
(Reporting by Michael S. Derby; Editing by Paul Simao)
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