By Michael S. Derby
March 16 (Reuters) – Americans’ attempts to tap new credit rose to their highest level in nearly four years as of February, new data from the Federal Reserve Bank of New York released on Monday said.
The bank said, as part of its latest Survey of Consumer Expectations Credit Access report, that applications for new credit were at their highest level since October 2022. In seeking more credit, the bulk of the interest gravitated toward requesting higher credit card limits as opposed to tapping new borrowing, the New York Fed said.
As survey respondents flagged a rise in demand for credit, they met fewer headwinds in securing it. The report said that as of February, the rejection rate for new credit stood at 15.9%, the lowest level since June 2021.
That said, over the last year borrowers faced a record high level of lenders closing accounts. The New York Fed report did not say why so many lenders are cutting off accounts.
The New York Fed data release arrives in a week when the interest-rate-setting Federal Open Market Committee is meeting to deliberate on interest rate policy in the shadow of 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 Fed meeting is expected to see rates held steady at its conclusion on Wednesday.
The war is causing oil prices to surge and the impact of that is likely to result in both higher inflation and slower growth, as consumers are forced to spend more on energy and less on other goods and services. That could also create further challenges for an economy where the less well-off are struggling more than wealthier Americans.
The New York Fed report also said that survey respondents’ belief they could come up with $2,000 to deal with an unexpected expense “decreased slightly” to 63.3% of those surveyed.
(Reporting by Michael S. Derby; Editing by Mark Porter)
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