U.S. Markets closed

Here’s why investors shouldn’t worry that the Fed reported banks tightening lending standards

Sunny Oh
Here’s why investors shouldn’t worry that the Fed reported banks tightening lending standards

When a recent survey by the Federal Reserve showed banks expected credit standards to tighten this year, it drew the attention of investors as a more cautious financial sector is usually one of the first premonitions of a recession. With growth still robust but slowing, market participants say banks will ease their lending taps again once talk of an economic downturn fades. “Like back in 2016, as recession fears are proven wrong, this will pass and banks will once again go through a period of loosening lending standards well before the next downturn,” said analysts at Bank of America Merrill Lynch in a Tuesday note.