US Central Bank holds at zero countercyclical resource cushion

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US Central Bank holds at zero countercyclical resource cushion

US Central Bank Keeps Countercyclical Capital Buffer At Zero

The US Federal Reserve, after speaking with other bank regulators, said it made the decision

On Friday, the U.S. Federal Reserve Board voted to keep its countercyclical capital cushion at zero percent, meaning it would not order banks to retain extra capital in a potential economic crisis to defend against losses. Since speaking with other bank regulators, the Fed said it had made the announcement.

In periods when the economy is solid, the instrument is intended to guide banks to build up reserves to improve stability in potential recessions.

But it was never caused by the Fed, except at the tail end of the record-long expansion that ended with the coronavirus pandemic and the latest slowdown in February.

Governor Lael Brainard, who had repeatedly supported a buffer raise before the current crisis, did not argue with the decision on Friday.

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