Transmission Mechanism May 2026

: Affects the willingness of banks to lend; higher rates can reduce a borrower's net worth, making them appear riskier to lenders.

: If people believe the central bank will keep inflation low, they may moderate their own price-setting and wage demands. 🦠 Disease Dynamics transmission mechanism

: Interest rate shifts change the value of the local currency, making imports or exports cheaper or more expensive. : Affects the willingness of banks to lend;