A methodology specifically suited to the area of nutrition is lacking, despite a clear need and important requirement from policymakers as well as a direct interest for consumers.
On the other hand, usury laws that cap interest rates for consumer loans do not apply to business credit, so rates can be higher.
A lowered repo rate may signal a decrease in interest rates for consumer loans, and is generally considered a sign that Reserve Bank officials believe the economy needs bolstering.
If the Fed bought, for example, two-year Treasury notes, that demand would push prices up and yields down, and presumably would also push down the interest rates for consumer credit that tracks those Treasury securities.
The key reason is that California has no limit on interest rates for consumer loans of more than $2,500, and it otherwise doesn't regulate auto title loans.
But if capital markets suddenly decide, you know what, the U.S. government doesn't pay its bills, so we're going to start pulling our money out, and the U.S. Treasury has to start to raise interest rates in order to attract more money to pay off our bills, that means higher interest rates for businesses; that means higher interest rates for consumers.
The cut in reserve requirements should free 8 billion reais, or about $2.6 billion, theoretically allowing banks to lower interest rates for consumers and small businesses and help jump-start the moribund economy.
