Federal Reserve Governor, Lisa Cook, addressed the potential negative impacts on global markets stemming from escalating geopolitical tensions at the Central Bank of Ireland Financial System Conference on Wednesday. She drew attention to a series of concerns including regional trade disruptions due to Russia's conflict with Ukraine, risks to energy and financial markets from Middle Eastern conflicts, and potential financial stress in emerging economies due to China's economic slowdown.
Cook stated that these issues could exacerbate supply chain challenges, inflationary pressures, and global humanitarian and migration challenges. Additionally, they might lead to asset price declines and losses for exposed businesses and investors.
The Federal Reserve Governor also expressed concerns about nonbank financial institutions amid the Fed's policy cooling the economy. However, she refrained from commenting on the monetary policy outlook.
In related news, Federal Reserve Chair Jerome Powell hinted at ending rate hikes after maintaining a 22-year high interest rate steady at 5.25% to 5.5%. The impact of rising long-term Treasury yields is currently being assessed by officials.
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