Branch² Intelligence
Inflation concerns prevailed in Kevin Warsh's first FOMC meeting: Fed minutes
Key takeaway
Fed holds rates amid sticky inflation, signaling higher-for-longer US rates.
- Step 1Fed holds rates, US term premium widens as inflation persists.
- Step 2Higher US term premium transmits to UK gilt yields via cointegrated long-rate markets.
- Step 3UK SME lending spreads widen, increasing financing costs for leveraged businesses.
- Step 4Discretionary demand softens as UK households face higher mortgage costs, reducing SME revenue.
Source: IN:Economic Times
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