Fed Warns of Significant Hit to Asset Prices If Crisis Grows (1)

The Federal Reserve issued a stark warning Friday that stock and other asset prices could suffer significant declines should the coronavirus pandemic deepen, with the commercial real estate market being among the hardest-hit industries.

The Fed made the assertion in its twice-yearly financial stability report, in which it flags risks to the U.S. banking system and broader economy. The document highlighted the central bank’s race to intervene in markets and temporarily dial back regulations on financial firms in response to the Covid-19 crisis.

“Asset prices remain vulnerable to significant price declines should the pandemic take an unexpected course, the economic ...