The prevalence of fixed-rate debt suggests the Fed’s aggressive rate hikes will continue to deal less damage to the economy than they might have done in the past. But higher rates are still likely to take a further toll on consumption and business investment over time as more debt needs to be refinanced, while also continuing to weigh on demand for new loans. Moreover, the rise of fixed-rate debt implies that the Fed may eventually need to cut rates more aggressively if it wants to support the economy further ahead.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services