We said borrowing rates weren't likely to go up all that much. The spread between credit card rates and the Fed's interest rate was already quite large.
Portugal's borrowing rates jumped, too (see chart 1).
On Wednesday India's central bank raised a key short-term borrowing rate by a quarter percentage point to 8.0%.
Corporate borrowing rates are much higher.
This paper is mainly about the portfolio choice with borrowing rate higher than deposit rate when the investor invests into a project.
Risk aversion, fear of default and depleted bank capital have caused private borrowing rates to deviate sharply from policy rates.
That would lower their funding costs and in turn bring down borrowing rates for small businesses.
The portfolio selection with superior assets on restriction of the borrowing rate is discussed.
One way or another, the BoJ should have a clearer idea about how much people have been spending—and whether to risk raising its key borrowing rate—from late January onwards.
The lowest deposit rate set by the central bank ACTS as a floor for short-term interest rates in money markets and for borrowing rates generally.
