Takeaway: Conventional economic wisdom holds that when a central bank cuts interest rates, commercial banks lower their own lending rates to encourage borrowing. However, new research shows that because of how central banks shift market liquidity, rate cuts can actually cause heavily constrained banks to raise loan rates and reduce lending. Key Points Policy Mechanism: Central banks change interbank interest rates by buying or selling government bonds, which directly alters t

Spending on new homes rose by 18.2 percent from the previous year, but rising costs and interest rates could slow down the pace of...