Very recent SLOOS (Senior Loan Officer Opinion Survey on Bank Lending Practices) data shows a sharp tightening in the business loan market, with important implications for future economic growth.
Commentary
- As Fed Chair (Jerome Powell) recently indicated in his recent press conference, credit conditions had already been tightening over the past year or so in response to the Fed’s policy actions and a softer economic outlook.
- However, the strains that emerged in the banking sector in early March appear to be resulting in even tighter credit conditions for households and businesses.
- In turn, these tighter credit conditions are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain.
