Phillip An

Jun 25, 2024 | kansascityfed.org | Karlye Dilts Stedman |W. Blake Marsh |Phillip An

Subscribe Share Download Article Business cash holdings have soared since the onset of the COVID-19 pandemic amid surging fiscal spending, a growing Federal Reserve balance sheet, and rising economic uncertainty. As a result, cash holdings relative to GDP remain substantially higher than pre-pandemic levels for both large corporate firms (Chart 1, blue line) and smaller, non-corporate firms (purple line).

Feb 2, 2024 | kansascityfed.org | Huixin Bi |W. Blake Marsh |Phillip An

Subscribe Share Download Article In recent years, the Federal Reserve tightened monetary policy at an unprecedentedly rapid pace to quell post-pandemic inflation. Since March 2022, the target federal funds rate—the Fed’s preferred policy lever—has increased 525 basis points. In response, market interest rates have broadly risen across the economy, leaving businesses’ borrowing costs higher than levels that prevailed before the pandemic.