Lending spreads may dampen monetary policy – research
Rate hikes appear to have been muffled and cuts might be too, say Kansas City Fed authors
Private lending spreads are dampening the effect of rate hikes and may have the same effect on any rate cuts, according to a study by the Federal Reserve Bank of Kansas City.
The spreads are the difference between the federal funds rate and the rates paid by borrowers. The paper, written by Andrew Glover and Johnson Oliyide and published on August 14, says they are surprisingly low, and that this helps explain why rate hikes have not slowed the US economy as much as expected.
The authors say the
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