Why Haven’t Recent Rate Increases Slowed the Economy More? Look to Unusually Low Private-Lending Spreads
Andrew Glover and
Johnson Oliyide
Economic Bulletin, 2024, 4
Abstract:
Despite a large and rapid increase in the policy rate since March 2022, economic activity has remained resilient. We argue that private-lending spreads—the difference between the policy rate and rates private-sector borrowers pay—are surprisingly low and a major factor for why rate hikes have not slowed the economy more. If spreads are as insensitive to rate cuts as they are to rate hikes, then they may dampen the effect of expansionary monetary policy.
Keywords: monetary policy; interest rates; lending (search for similar items in EconPapers)
Date: 2024
References: View complete reference list from CitEc
Citations:
Downloads: (external link)
https://www.kansascityfed.org/Economic%20Bulletin/ ... loverOliyide0814.pdf Full text (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:fip:fedkeb:98743
Ordering information: This journal article can be ordered from
Access Statistics for this article
More articles in Economic Bulletin from Federal Reserve Bank of Kansas City Contact information at EDIRC.
Bibliographic data for series maintained by Zach Kastens ().