Consumers and businesses buoyed by pandemic-fueled savings are proving less sensitive to tighter credit, which means more work for the Fed

wsj.com
Cash-Rich Consumers Could Mean Higher Interest Rates for Longer
Consumers and businesses buoyed by pandemic-fueled savings are proving less sensitive to tighter credit, which means more work for the

ECONOMY | THE OUTLOOK

Cash-Rich Consumers Could Mean Higher Interest Rates for Longer

Buoyed by pandemic-fueled savings, consumers and businesses are proving less sensitive to tighter credit—complicating the Fed’s job

By Nick Timiraos
https://twitter.com/NickTimiraos
Nick.Timiraos@wsj.com
Oct. 30, 2022 5:30 am ET

Washington’s response to the pandemic left household and business finances in unusually strong shape, with higher savings buffers and lower interest expenses. It could also make the Federal Reserve’s job of taming high inflation more difficult.

The U.S. central bank is trying to slow down economic growth to prevent inflation from becoming entrenched. To that end, it has increased rates aggressively this year and is likely to raise them another 0.75 percentage point at a two-day policy meeting that concludes Wednesday. That would bring the benchmark federal-funds rate to a range of 3.75% to 4%.

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