The 3.63 Fed Funds Rate Is Squeezing Small Business Lending

The Fed has held the federal funds rate at 3.63 percent since May, and while headline inflation is slowly cooling, a less obvious casualty is emerging: small business lending. In this episode, Lucas and Luna examine new data from the Fed's Senior Loan Officer Opinion Survey showing that banks are tightening credit standards for small firms at the fastest pace since 2020. With the prime rate tied to the funds rate, variable-rate loans for Main Street businesses now carry interest costs near 8 percent. The hosts break down why this is happening, how it ties to the inverted yield curve—with the 2-year Treasury at 4.22 percent and the 10-year at 4.45 percent—and what the recent 1.6 percent annualized GDP growth figure means for the odds of a Fed pivot later this year. They also discuss why job openings surged to 7.6 million in April even as hiring stayed tepid, a sign that businesses want workers but can't afford the capital to expand. No hot takes, just the mechanics of monetary policy transmission through the real economy. #SmallBusinessLending #FedFundsRate #MonetaryPolicy #CreditCrunch #InvertedYieldCurve #PrimeRate #KevinWarsh #FederalReserve #GDPGrowth #JOLTS #JobOpenings #LoanOfficerSurvey #MainStreet #Economics #FexingoBusiness #BusinessPodcast #MacroMemo #InterestRates Keep every episode free: buymeacoffee.com/fexingo