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Introductory Technical Fundamental Economics Opinion Sectors International Regulatory Other Markets

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Definition

The amount of money borrowed by companies, private individuals and other non-government organisations. This figure is made up of private individuals borrowing on credit cards, overdrafts and trade accounts and then companies borrowing to finance growth. The monetary policy committee (MPC) controls the level of interest rates through the repo rate charged to commercial banks and this, in turn, directly impacts the overdraft rate, the mortgage bond rate and all other interest rates. When private credit extension rises too quickly the MPC will tend to increase rates to make it less attractive to borrow - and vice versa.

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