So, where are the higher interest rates from the Fed December "liftoff." Other than the funds rate and the repo rate, no other market rate is higher today than it was before the "liftoff." That's right! No market rate has gone up (the prime rate is not a market rate).
Indeed, rates are not only lower today, they are substantially lower than they were prior to the Fed liftoff. Excess reserves are sloshing around in the commercial banking system to the tune of nearly $ 2.5 trillion, according to the recently released data on the Fed's balance sheet. The only tightness in the lending market is due to regulatory zeal, certainly not a lack available funding in the commercial banking system, which is still loaded with excess reserves in a way never seen before 2009.
All that has happened is that the Fed is wasting a ton of taxpayer money by paying 50 basis points on commercial bank deposits at the Fed and doing reverse repos at 25 basis points with the great unwashed.
There is no tightening; there will be no higher rates. This is all some ridiculous joke. Thank goodness, because it looks like the global economy is rolling over and the US is going with it -- not a good time for rates to go up or for banks to be financially constrained from expanding commercial lending. Fortunately, the Fed liftoff neither raised market rates nor financially constrained the banking system.
However, overzealous regulators are at their posts, substituting their (inexperienced) opinion as to who to loan to, for the experienced bank veterans of commercial lending This is how they used to do things in China, but even the Chinese learn. American regulators, unfortunately, do not learn.