Consumer credit rises over $38 billion, with the Overnight Bank Federal Funds Rate still at 3 yr lows. Money still pouring into loan markets, as a backstop to inflation.

U.S. Consumer credit surged  in April to $38.7 billion, driving overall credit to $867 Billion, surpassing the 2020 peak before the Covid-19 pandemic hit.  This surge in credit and spending this is the last gasp of inflation backstop  via credit cards and personal loans to cover rising costs.  Note the chart above, with the white line being the revolving credit for the consumer, the yellow line credit card delinquencies (credit card defaults) and the blue line the Overnight Bank Federal Funds Rate (OBFR), which sets credit and personal loans rates for commercial banks.   The OBFR at the start of the pandemic was close to 0% at 0.05, which was essentially free money for the banks to utilize into credit and loan markets, the rate now sits at 0.82%, but way under the 2019 peak at 2.40%.  This credit fueling, within the context of the worst inflation in four decades, is most likely the conundrum that the Federal Reserve has in lifting interest rates or whether they can reduce the close to 9 Trillion of assets, sitting on their balance sheet (separate plane beneath chart)