Why Interest Rates Take So Long To Affect The Economy

Federal Reserve leaders warned of monetary policy's "long and variable" lags numerous times in 2023. This term refers to the unpredictable speed at which interest rate changes can affect the economy. The higher borrowing costs that come with the Fed's decisions may slow economic growth for long periods of time. And in the short term, businesses and households may contend with moderately higher cost loans. Chapters: Cold Open: 0:00 - 01:14 Chapter 1: Lags 01:15 - 03:25 Chapter 2: When, exactly? 03:25 - 06:15 Chapter 3: Predictions 06:15 - 08:26 Produced by Carlos Waters Animation by Christina Locopo Supervising Producer Lindsey Jacobson Additional Footage Getty Images Additional Sources Federal Reserve Bank of Atlanta, Federal Reserve Bank of Dallas, Federal Reserve Bank of Kansas City, Reuters, Federal Reserve Bank of San Francisco