Monetary-policy tightening both reduces firms’ incentive to innovate by decreasing overall demand, and curtails financial investment through less optimal financial conditions and reduced appetite for risk taking, economists Yueran Ma and Kaspar Zimmermann found. Ma presented the paper at the conference in Jackson Hole, Wyoming, hosted by the Kansas City Fed.
An interest-rate increase of 1 percentage point leads to a 1% to 3% drop in spending on research and development and a 25% decline in venture capital investment in the next one to three years, the authors found. Central banks around the world have raised interest rates to try and cool inflation that was in part driven by outsize demand as economies emerged from the Covid-19 pandemic.
We have summarized this news so that you can read it quickly. If you are interested in the news, you can read the full text here. Read more:
Loans Loans Latest News, Loans Loans Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Fed Rate Hikes in 2024 Are ‘Not Unthinkable,’ Pimco Warns(Bloomberg) -- Pacific Investment Management Co. says the Federal Reserve may not be done raising interest rates just yet. Most Read from BloombergWagner Chief Prigozhin Listed Aboard Crashed Jet, Reports SayHuawei Building Secret Network for Chips, Trade Group WarnsMore People Call in Sick on August 24 Than Any Other DayBRICS Bloc Grows Heft With Saudi Arabia and Other Mideast PowersStocks Drop as AI Buzz Wanes With Powell in Focus: Markets WrapTiffany Wilding, an economist at the investment fi
Source: YahooFinanceCA - 🏆 47. / 63 Read more »
Powell at Jackson Hole: Economy's solid growth could require more rate hikesThe continued resilience of the U.S. economy could require further interest rate increases, Federal Reserve Chair Jerome Powell said Friday in a closely watched speech that also highlighted the uncertain nature of the economic outlook.
Source: BNNBloomberg - 🏆 83. / 50 Read more »
Central bank efforts to cool inflation may harm innovation, study showsBy Howard Schneider JACKSON HOLE, Wyoming (Reuters) - Central bank efforts to slow inflation, by raising borrowing costs and cooling demand for goods ...
Source: SaltWire Network - 🏆 45. / 63 Read more »