Treasury Secretary Janet Yellen in an interview broadcast on Sunday warned that banks could possibly additional tighten lending in the wake of the abrupt collapses of Silicon Valley Bank and Signature Bank.

“Banks are probably to turn into somewhat much more cautious in this atmosphere. We currently saw some tightening of lending requirements in the banking technique prior to that episode, and there might be some much more to come,” Yellen stated on CNN’s “Fareed Zakaria GPS.”

She also stated that the Biden administration “took fast action” to deal with the bank failures, citing “idiosyncratic characteristics that brought on them to fail,” and stated the banking technique has appeared to stabilize right after these actions have been taken.

California’s Silicon Valley Bank shuttered abruptly final month, marking the biggest bank failure in the U.S. due to the fact the 2008 monetary crisis. The collapse was followed shortly by the closure of New York’s Signature Bank in what became the second-biggest bank failure in that period. 

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“We’re, of course, monitoring issues cautiously,” Yellen stated on CNN. “But I consider the actions that we’ve taken have stemmed the systemic threat that existed— existed for the reason that of the failure of these banks.”

The banks’ caution “does have a tendency to lead to somewhat higher restriction in credit that could be a substitute for additional pricing— additional interest price hikes that the Fed requires to make,” Yellen added. Just after rates soared final year, the Fed has hiked up interest prices in an work to tamp down inflation.

“But I’m not seeing something at this time that is dramatic sufficient or important sufficient, in my view, to substantially modify the outlook,” she stated. “So, I consider the outlook remains one particular for moderate development and continued robust labor market place with inflation coming down.”

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