Latest / Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates
Why Central Banks Care About Bank Profitability
Episode 154 of Monetary Policy Explained digs into a quiet but crucial topic: why central banks care about bank profitability. Lucas and Luna walk through the mechanics of how rate hikes can squeeze net interest margins, using the 2023 U.S. regional banking stress as a concrete case. They explore the trade-off central banks face between fighting inflation and keeping banks healthy, with examples from Europe's negative rate era and Japan's yield curve control. The episode explains concepts like net interest margin, the transmission mechanism, and the risk of a credit crunch, all in…
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