"The number of community banks in the United States has declined sharply over the past three decades, due to a combination of failures and acquisitions. And many remaining community banks have struggled to survive, especially during the last five or six years."
- Jerome Powell, Federal Reserve Governor
President of the Federal Reserve Bank of Minneapolis Narayana Kocherlakota noticed on Tuesday that the Federal Reserve should improve its communication with nation and business. As important point, the Fed should determine dates, when it is planning to reach inflation goal of 2%. The Bank of Canada and other central banks are already using the two-year target period, as it is considered as optimal to predict real inflation movements during this time, and the Fed is probably going to follow its colleagues from abroad. Moreover, Mr. Kocherlakota warned about consequences of low inflation in the Eurozone and possible effect it may have on the U.S. The Fed should follow global economic development before taking any decisions on interest rates.
Federal Reserve Governor Jerome Powell, however, asked the regulator's officials to pay more attention to smaller banks, as they are more sensitive to changes in the monetary policy and suffer from rising competition among large banks. Over past three decades the total number of small community banks declined significantly, while some of them were acquired by bigger competitors. At the moment there are almost 7,000 banks with assets below $10 billion, and the majority of them are struggling to adapt to regulation and conditions of financial supervision. Therefore, focus should be made on these banks, as they play important role in local economies.
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