No ABS like in cars
Jan 19, 2024
The hawkish policy by the Fed, the higher rates and the US regional banking crisis last year in the US took their toll on bank credit. It is only the second time over the last 50 years that total bank credit in the US is contracting. Credit contraction will act as an economic brake and have a dampening effect on the US economy. This is exactly what the Fed intended by raising rates. Central bankers must however be extremely careful to avoid policy mistakes. Unlike in cars, there is no such thing as an anti-lock braking system for the US economy.