We at the Federal Reserve use this information in nearly every area of our responsibility. For example, in our roles as bank supervisors and protectors of financial stability, we monitor the credit spreads of financial institutions as early warning signs of possible financial stress.
In our role as monetary policy makers, we analyze information from credit-risk markets to get readings on the cost of capital to businesses and on forward-looking indicators of the health of the corporate sector that can have implications for future macroeconomic developments.