Financial Conditions Index
A Financial Conditions Index (FCI) is a composite measure that summarizes the stance of financial markets by combining several variables such as interest rates, credit spreads, asset prices, and funding conditions into a single index that signals how easy or tight financial conditions are. FCIs are used to track liquidity and credit availability and to inform macroeconomic analysis.
Example: In a quarterly macro report, the FCI rose modestly as credit spreads widened and stock prices fell, indicating tighter financial conditions even with stable policy rates.
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