The costs of capital have increased because of Fed hikes and tighter credit conditions. As a result, there are firms every day that cannot get a new loan or refinance their maturing loan.
This is how monetary policy works. Higher costs of capital slow down financings and, ultimately, growth and inflation.
With the Fed saying that interest rates will stay high for “a couple of years,” this process will continue to slow down the economy. Our outlook for regional banks is available here and documents current trends in detail.
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