Maybe in the US where there are more banks this is true. I might be looking at it through a Canadian lens, where there are basically five big banks and their rates fall in line with the overnight rates in lockstep (overnight + 2-3 points). But if you shop around, does the best deal you can get on a mortgage really vary that widely from the overnight rate? What’s the most extreme example - like, if the overnight is half a percent, is someone going to be advertising a mortgage at 8%?
I’m not 100% sure I agree with myself, but basically I don’t like what central banks have done with interest rates. Maybe it’s just because I’ve lived my life in an era of neo-liberalism and ever falling interest rates, and it’s left me feeling like a libertarian on the issue (governments just can’t be trusted to do it right). I’m sure there are good policy reasons to have the interest rate set at one level or another, but I can’t believe there are good policy reasons to have it set at 0.5%, and I think that has essentially been a transfer of wealth from people who are trying to establish themselves (young people/poor people) to people who have already established themselves (old people/rich people). Conversely, maybe a higher than “natural” interest rate would be a transfer in the other direction. So maybe when I say I don’t like central control of interest rates, it’s like I’m saying I don’t like taxes because I think they are too low.
I’m not entirely sure.
