The US Federal Reserve’s hawkish stance may be removing more than $2 trillion of liquidity from the banking system by the end of 2024, Fitch Ratings warned Thursday.

The Fed’s monetary tightening could have “potentially significant implications for credit markets,” the rating agency said in a report.

It said it expects the Fed to make four rate hikes this year, by 25 basis points each, and an additional 100 basis points of interest rate increases next year.

In a separate report, it said rate hikes will directly affect loan repayment, reduce cash flows and increase loan refinancing challenges for certain structured finance asset classes.

“Higher interest rates will make commercial real estate loan refinancing more costly relative to recent years,” it said. “Student loan refinancing will be less attractive to borrowers and may cause prepayment rates to slow.”

Fitch, however, said asset performance will continue to be supported by relatively low interest rate levels and a continued jobs recovery.

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