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What Does the NFCI Tell Us About Future Economic Growth?
Abstract: The Federal Reserve’s policy tools rely on financial markets to transmit changes in monetary policy to the real economy. For instance, changes in short-term interest rates set by the Fed and faced by financial institutions—e.g., the federal funds rate—affect longer-term rates paid by firms and households. These rate changes in turn impact borrowing and spending decisions. Understanding the current state of financial conditions is, thus, both critical to central bankers and of interest to the wider public.
JEL Classification: C38; E44; G01;
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Provider: Federal Reserve Bank of Chicago
Publication Date: 2024-06