The Unequal Effect of Interest Rates by Race, Gender

Puig, Aina

Journal Article

The Unequal Effect of Interest Rates by Race, Gender

Abstract: Household spending typically falls as interest rates rise, but the responses vary by race and gender. Data show that households with mortgages headed by white women cut their spending on durable goods about a quarter percentage point in the three years following a 1 percentage point increase in interest rates. This is a much larger reduction than for households with mortgages headed by white men or Black men or women. The differences highlight the challenge of understanding how policy interest rate changes affect a diverse population.

Keywords: interest rates; race; gender; household spending; durable goods; diversity; white men; white women; black men; black women;