Powell Says Fed Closely Monitoring Rise of Private Credit

Powell said the Federal Reserve is keeping a close watch on the growing private credit market, describing it as a “relatively small part of a very large asset pool.”

Still, he emphasized that regulators are paying careful attention to the space as it expands.

“We’re watching it super carefully, as everyone is,” Powell said, saying that the Fed is in regular contact with industry participants and investors.

Officials, he said, are focused in particular on potential risks to the broader financial system, including links to traditional banks.

“We’re looking for things that might lead to greater tension, or greater losses, or connections to the banking system,” he said.

While Powell stopped short of sounding alarm, he made clear the Fed is not taking any chances.

“It’s something we’re following very carefully,” he added.