Credit impulse explained
How the change in new credit flow can lead economic momentum, and why level, direction, and transmission all matter.
Summary
Credit impulse measures the change in the flow of new credit relative to the size of the economy. It is most useful as a directional input, not as a stand-alone market-timing rule.
Why it matters
Credit creation can affect investment, property, inventories, consumption, and imports before the impact becomes visible in slower official activity data.
What to watch
Direction and rate of change
Private versus public credit
Regional contribution
Lead to activity and exposed assets
Research workflow
- 01Measure the impulse
- 02Compare with the business-cycle state
- 03Check liquidity and financial conditions
- 04Seek confirmation in cyclicals, commodities, and FX