Weakness in the U.S. economy As the effects of the U.S. government's spring fiscal stimulus package wear off, a fall in U.S. domestic demand seems likely. Household credit growth has slowed sharply and will likely slow further. Indeed, credit conditions faced by U.S. households have tightened despite the cumulative 3.25-percentage-point reduction in policy interest rates.
The most recent survey of U.S. senior loan officers showed an expectation of still tighter credit conditions for business and consumers in the months ahead as banks reduce their tolerance for risk and react to the unfavourable economic outlook. Recent financial market events will reinforce these tendencies. The U.S. housing sector is central to that country's economic and financial outlooks.