Monetary policy and credit card spending

BIS Working Papers  |  No 1064  | 
13 January 2023
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 |  33 pages



This paper is the first to use credit card data to assess how monetary policy affects consumer spending. The analysis uses transaction-level information provided confidentially by Fable Data for more than 1 million accounts in Germany over the period 2017–21.


Credit card data offer two key advantages over traditional consumer spending indicators. First, they are available at a daily frequency, allowing the transmission lags of monetary policy to be assessed more accurately. Second, they can be disaggregated across spending categories and user characteristics. This makes it possible to look for possible differences in the effects of monetary policy across economic sectors and people.


We find that monetary policy tightening can significantly reduce consumption. The transmission lags depend on the maturity of the interest rates affected by the monetary tightening. Increases in short-term rates are transmitted to consumption very rapidly whereas increases in medium-term rates take about six months before consumption is affected. By contrast, monetary easing seems not to lift consumption. The analysis also shows that monetary policy can have different effects across spending categories and people. For example, monetary tightening reduces spending on discretionary goods but boosts spending on consumer staples, probably because of substitution effects. Furthermore, monetary tightening seems to have a stronger effect on higher-income card users. On the other hand, we do not find differing effects on the spending of men and women, or of different age groups.


We analyze the impact of monetary policy on consumer spending using confidential credit card data. Being available at daily frequency, these data improve the identification of the monetary transmission and allow for a more precise characterization of the transmission lags. We find that shocks to short-term interest rates affect spending much more rapidly than shocks to medium-term interest rates. We also document significant asymmetries in the effects of monetary policy. While interest rate hikes strongly curb spending-especially if coupled with reductions in stock prices reflecting pure monetary policy shocks-interest rate cuts appear unable to lift spending. Finally, we exploit the disaggregation of credit card data to examine the heterogeneous effects of monetary policy across spending categories and users' characteristics.

JEL classification: E21, E52

Keywords: credit card spending, heterogeneity, monetary policy, transmission