Because firms are not The views expressed here are my own and not necessarily those of my colleagues on the Federal Open Market Committee. 1  -2identical, only a share of firms adjust their prices each period. So, when aggregate demand increases, firms with set prices agree to supply the goods demanded at their current prices.
However, bank funding costs have so far remained contained. Bank lending rates for firms and households continue to stand at historically low levels and financing conditions for the economy remain favourable. Lending to firms has picked up, supported by both short and longer-term loans. Robust demand for mortgages is sustaining lending to households.