Yield curve affects banks’ ability to lend – Boston Fed study
Central banks should consider effects when calibrating balance sheet policies, say authors
The slope of the yield curve affects banks’ profits and, consequently, their ability to lend, research from the Federal Reserve Bank of Boston claims.
The working paper, published this month, says that rather than simply being a predictor of economic outcomes, the yield curve may be actively influencing banks’ lending decisions.
The yield curve plots the rates of bonds across different maturities. Economists often view an inverted curve, showing higher values for short-term bonds, as a sign of
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