Persistent inflationary pressures leading to a more restrictive than expected monetary policy stance is the most frequently cited risk to financial stability by researchers, academics and market participants, according to a report issued late Friday by the Federal Reserve.
Other areas of concern outlined in the report include:
- Policy uncertainty as a risk to the financial system stood at just under two-thirds of participants, significantly higher than those cited in the stability report for October.
- More than half of all survey participants mentioned the potential effect of large realized losses on commercial real estate (CRE) and residential real estate, down from three-fourths of all participants in the previous survey.
- Risks associated with the reemergence of banking-sector stress and with fiscal debt sustainability in advanced economies followed as the next most cited concern.
The Fed typically publishes the report at least twice a year.