Fed watching private credit sector for signs of trouble, Powell says - Reuters

Federal Reserve Chair Jerome Powell said the central bank is monitoring the private credit sector for potential risks and instability. The private credit market—which includes non-bank lenders offering loans outside traditional banking channels—has grown substantially in recent years as companies seek alternatives to conventional bank financing. Powell's remarks signal Fed concern that rapid growth in this less-regulated sector could pose systemic risks to financial stability if problems emerge. The private credit market has attracted scrutiny from regulators and policymakers over questions about transparency, borrower protections, and interconnections with the broader financial system. The Fed's watchful stance suggests potential future regulatory action if the central bank identifies warning signs of instability.