Interest‑Cap as Populist Economic Tool

A short‑lived statutory or executive cap on consumer interest rates (e.g., 10% APR for one year) is being positioned by political leaders as a fast, visible anti‑inflation/consumer‑relief measure. While it produces large headline savings estimates (researchers estimate ≈$100B/year saved), it also risks displacing borrowers into unregulated credit markets (payday apps, BNPL, loans from nonbanks) and compressing bank lending models, creating spillovers in credit availability and shadow‑bank growth. — An administratively fast interest‑cap is a test of whether populist price‑controls can materially help households without triggering substitution to higher‑risk credit channels or creating systemic credit retrenchment.