Do all roads lead to multi-scenario Fed stress tests?
This year’s CCAR faced criticism for underweighting the risk of higher-for-longer inflation
Imagine you walked into the school hall having prepared for a literature exam, but the examiner handed you a history test instead. While not quite so nightmare-inducing, banks feel they have faced a similar twist of fate in this year’s Federal Reserve stress test.
The severely adverse scenario in the 2023 comprehensive capital analysis and review (CCAR) was based around a recession with a sharp fall in inflation. But in reality, banks are also facing up to concerns about persistent high
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