The Outlook for the Economy and Banks

In my remarks today, I will offer some thoughts on the economic outlook, as well as the outlook for banking.1 The outlook Since the pandemic upended the global economy a little over a year ago, we have made considerable progress along the path to economic recovery. [...] 1 Inflation over the 12 months ending in April, as measured by the consumer price index (CPI), increased to 4.2 percent, the fastest pace in over a decade and up considerably from the 1.4 percent pace recorded at the start of the year. [...] The role of banks in the recovery The banking industry has of course also played a key role in the recovery to date. [...] Banks provided around $270 billion in withdrawals on existing lines of credit to businesses in the first quarter of 2020 to cover anticipated revenue shortfalls.3 While the initial pandemic policy response of the Treasury and the Federal Reserve addressed the liquidity squeeze in March 2020, subsequent policy actions have pivoted from containing a potential financial crisis to addressing the chall. [...] The FedNow Service is a high priority for the Federal Reserve and will lay a foundation for the future of payments that can be used as a springboard for innovation and yield important economic benefits for the public.