Powell Says Fed Currently Doesn't See Large Financial Imbalances

The video discusses the financial landscape post-crisis, highlighting the absence of large imbalances during the current expansion. It introduces a four-part framework focusing on leverage in the financial system, funding risk, asset prices, and leverage in the non-financial sector. While household leverage is low, corporate debt is notably high, prompting careful monitoring and action.

What is notable about the current long expansion in the financial system?

• It is driven by high consumer spending.

• It has the highest inflation rates.

• It lacks large financial imbalances.

• It is characterized by large financial imbalances.

According to the framework, how is leverage in the financial system currently characterized?

• Increasing rapidly

• High by historical standards

• Low by historical standards

• Unchanged from previous years

What is the current state of funding risk in the financial sector?

• High for banks but low for non-banking sectors

• Low for both banks and non-banking sectors

• High for non-banking sectors only

• Unpredictable and volatile

How are asset prices described in the current financial environment?

• Stable and predictable

• High but not broadly across a range

• Indicative of a bubble

• Broadly high across all sectors

Which sector is noted for having historically high leverage?

• Households

• Government

• Corporations

• Non-profit organizations