New post by Cristina Jude and Grégory Levieuge

24 June 2024 Blog

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The effects of monetary tightening on financing conditions

The Fed and ECB raised their key interest rates in 2022-2023, at an unprecedented pace. The transmission of monetary tightening to financing conditions was similar in the eurozone and the USA, and comparable to previous cycles: almost 95% of the transmission would be completed within 12 months of the rate hike. However, the transmission of financing conditions to inflation takes place over longer and more variable timeframes. We republish here the Banque de France's Billet de blog n° 354, in a slightly revised version, put online on May 14, 2024 and written by Cristina Jude and Grégory Levieuge.