silicon valley bank was quirky with its own special problem st louis fed president the financial stress from the collapse of silicon valley bank will abate and the federal reserve will need to push interest rates higher than previously expected given prospects for stronger economic growth and stickier inflation st louis fed president james bullard said on friday in a speech and comments to reporters bullard said he raised his estimate of the endpoint of the feds benchmark interest rate by a quarter of a percentage point to 5625 the sooner the fed raises rates to this level the better he said bullard said this was based on his view that there was an 80 chance that the stress in the banking sector will abate he added that if stress intensified he would change his preferred rate path the us economy will be cushioned somewhat from the fallout of the recent stress in the banking sector because longterm bond yields have fallen he said bullard is one of the more hawkish regional fed bank presidents he is not a voting member of the feds interestrate committee this year taken as a whole fed officials penciled in an endpoint of 5125 for the benchmark rate earlier this week the fed raised its benchmark rate by 25 basis points to a range of 4755 bullard is calling for three more quarterpoint hikes to a range of 55575 silicon valley bank was a quirky bank with its own special problems and regulators can handle the fallout from it the st louis fed president said still the government stands ready to take additional actions as needed he stressed the rapid collapse of the bank caught everyone by surprise even executives at svb so it is natural that it has created concern in markets and caused investors to reassess banks in his district have angst but not actual problems bullard said the feds new lending facility set up two weeks ago goes to the heart of the matter and should work he said that program gives banks loans at special rates so they wont have to rapidly sell assets if hit by any run on their deposits stepping back it is relatively common that some banks dont adapt to changing interestrate environments despite clear signals from the fed bullard said he listed the collapse of continental illinois bank in 1984 the mexican tequila crisis in 1994 the bankruptcy of orange county in 1994 and the collapse of longterm capital management in 1998 these events received considerable attention at the time but were not ultimately harbingers of poor us economic performance bullard said while financial stress can be harrowing it also tends to reduce the level of interest rates and that tends to be a bullish factor for the economy during the current banking sector stress the 10year treasury yield has declined by 50 basis points and the 2year treasury yield has declined by about 100 basis points yields have fallen again on friday this natural reaction in markets is a silver lining bullard said overall regulators find themselves in much better shape to respond to bank stress as a result of the dodd frank law put in place after the 2008 financial crisis he said then fed officials were creating programs on the fly bullard said financial stress is higher now but nowhere near 20082009 levels he noted see emergency borrowing from fed dips a sign that bank stress may be easing on the other hand appropriate monetary policy can continue to put downward pressure on inflation bullard said the st louis fed president noted that the economy has been stronger than expected in the first quarter and the labor market has seen unprecedented strength that should continue to support consumer spending while inflation is too high it has declined recently bullard said he defended the feds rapid increase in its benchmark interest rate over the past year saying this has dampened the publics expectations of inflation this bodes well for the disinflationary process in 2023 he said us stocks were lower in late morning trade on friday on continued worries about the banking sector the yield on the 10year treasury note slipped to 336 well below the 4 level seen before the collapse of silicon valley bank this content was created by marketwatch which is operated by dow jones  co marketwatch is published independently from dow jones newswires and the wall street journal