David Harrison
speaker
171 appearances
4 recordings
1 series
first heard Mar 2018
last heard Jan 2022
David Harrison’s voice in public audio — every appearance, attributed to the second.
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Appearances
It takes a little while for that to happen.
That's something that, you know, it's almost by design.
It's something that Fed officials are very well aware of.
There's a long lag time in monetary policy.
And what we're finally starting to see now is the effect of these rate increases sort of translating into ordinary everyday interest rates.
So I guess it's a sign that the recovery is really at a point now where rate increases are actually having an effect and you're going to be paying more for that loan that you get.
Yeah, that's sort of the process, how this works.
When the Fed cuts, when there's a recession, obviously, you're much less likely to go out and borrow a lot of money to buy a house or a car when you say you've lost your job.
So these lenders face a pretty tough business environment during recessions.
So what happens then is the Fed will cut rates during recessions, encourage more people to borrow because borrowing is now cheaper, and lenders, they'll do the same.
I mean, they'll take those rate cuts they get from the Fed and they'll give those on to their customers because...
They want to drum up some business.
And that's sort of how the transmission effect happens, how Fed rate cuts kind of help the economy get back on its feet.
Further on that cycle, when the economy is doing better and the Fed decides, you know what, now is a good time for us to start raising rates, your mortgage lender, the bank giving you a car loan or the car dealership,
they're not in quite such a hurry to raise rates on you because, you know, they still want to... They're trying to compete with the other guy, and so they want to offer you a slightly better rate than the other guy.
So they'll be a little slower to raise their rates.
And it really takes a while after, you know, several more Fed rate increases, rate increases from the Fed, for them to nudge up their interest rates in return.
And that's what we're seeing.
It's kind of almost like this organic cycle that...
That leads to actual tightening in the economy.
Showing 141–160 of 171 · page 8 of 9
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