Washington, United States. Americans’ attempts to obtain new credit rose to their highest level in nearly four years as of February, according to data from the Federal Reserve Bank of New York.
Credit demand rises as rejection rates fall
The New York Fed said in its Survey of Consumer Expectations Credit Access report that applications for new credit were at their highest level since October 2022. It said the bulk of interest was in requesting higher credit card limits rather than taking out new borrowing.
The report said that as of February, the rejection rate for new credit stood at 15.9 per cent, the lowest level since June 2021.
Account closures reach record high
Over the last year, borrowers faced a record high level of lenders closing accounts, the report said. The New York Fed did not say why so many lenders are closing accounts.
Data released as Fed officials meet on interest rates
The release came during a week in which the Federal Open Market Committee is meeting to deliberate on interest rate policy amid President Donald Trump’s war on Iran.
Before the start of combat, Fed policymakers were contending with inflation pressures above target and a tepid job situation, with markets expecting them to cut interest rates sometime later next year. The meeting is expected to conclude on Wednesday with rates held steady.
The war has pushed oil prices higher, and the report said the impact is likely to result in both higher inflation and slower growth as consumers spend more on energy and less on other goods and services. It said this could create further challenges for an economy in which less well-off Americans are struggling more than wealthier Americans.
Ability to cover unexpected expenses dips
The report said respondents’ belief they could come up with $2,000 to deal with an unexpected expense decreased slightly to 63.3 per cent.
How do you expect changing credit access and interest rate policy to affect your household borrowing decisions?
