The Federal Reserve’s Senior Loan Officer Opinion Survey shows banks have tightened lending standards further while households and businesses remain wary of taking on additional borrowing. Given how important credit flow is to the US economy it makes it all the more likely that the economy will continue to slow, helping to bring inflation back to target
Banks tighten lending conditions across the board
The Federal Reserve last raised the Fed funds target range in July and with mortgage rates and car loans above 8% and credit card borrowing costs at record highs, officials are now regarding monetary policy as “restrictive”. But it is important to remember that it isn’t just the cost of borrowing that acts as a brake on activity, restricting access to credit is also hugely influential in taking heat out of the economy. Today’s Federal Reserve…
