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The pass-through of past monetary policy tightening to financing conditions

14 May 2024
Aide financière

Eco Notepad, post no. 354. Both the US Fed and the ECB have hiked their key interest rates in 2022-2023 at an unprecedented pace. The estimated pass-through of this tightening to financial conditions is similar in the euro area and the US, and comparable to previous cycles: almost 95% of the total response of financing conditions occurs within 12 months. However, the ultimate transmission from financing conditions to inflation comes about with longer and more variable lags.

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