March 5, 2026

The Hutchins Roundup brings the latest thinking in fiscal and monetary policy to your inbox. Have something you'd like us to include in the next Roundup? Email us and we'll take a look.

This edition was written by Sarah Ahmad, Andrew Rosin, Jack Spira, and Louise Sheiner.

Fair lending litigation reduces denial rates for Black borrowers

How does the enforcement of fair lending laws—through litigation—affect racial discrimination in mortgage markets? Matthew Maury of the NYU School of Law, Michael Suher of the Federal Reserve Board, and Jeffery Y. Zhang of Michigan Law School compare the relative outcomes of Black and white loan applications at banks that were sued for violating fair-lending laws between 1991 and 2023 with the relative outcomes at banks that were not. They find that fair-lending litigation lowered denial rates for Black applicants by 4 percentage points and raised origination rates by 3 percentage points. The authors provide suggestive evidence that the decrease in denial rates and the corresponding increase in origination rates were driven by newly approved loans to creditworthy borrowers: the share of loans to Black borrowers that banks sold to government-sponsored enterprises (GSEs)—a proxy for creditworthiness—increased by 10 percentage points following litigation. The authors also find evidence that banks operating in the same city as litigated banks decreased their denial rates and increased their origination rates for Black applicants following lawsuits against their competitors, possibly reflecting a greater awareness of the risk of litigation.

Higher minimum wages increase robot adoption in manufacturing

Erik Brynjolfsson of Stanford University and co-authors link plant-level data on industrial robot imports to Census microdata to examine how changes in minimum wage policy affect U.S. manufacturing firms’ adoption of automation technologies. They find that a 10% increase in the local minimum wage increases the likelihood of robot adoption by roughly 8% relative to the mean. The results suggest that high labor costs can speed the substitution of capital for labor in manufacturing.

Mortgage rate cuts boost household consumption, especially where house prices rise

Matching data on 6.8 million expiring mortgages in the U.K.—where mortgage contracts renew every two to five years—with data on household consumption from personal finance apps, Angus K. Foulis of the Bank of England and co-authors find that rate cuts significantly boost borrowers’ consumption. A one-percentage-point decrease in the mortgage rate leads households to increase their cash on hand (through cash flow from new borrowing as well as savings from lower mortgage payments) by 1.4% and their consumption by 3% over the following six months. Comparing these effects across regions with different responses of house prices to interest rates, the authors find that increased borrowing against higher house prices accounts for two-thirds of the cash-on-hand and consumption responses, with cheaper debt service explaining the rest. Households that are more leveraged respond more strongly to rate cuts.

Oil prices start off with a bang in March

Chart courtesy of The Wall Street Journal

Quote of the week

"Inflation remains too hot. The recent data suggest that inflation remains closer to 3% than the Fed’s 2% inflation objective. Higher goods prices, partly on account of tariffs, are certainly part of the story, but the inflation rate for services is also running strong, and faster than what is consistent with us returning to our overall 2 percent inflation objective," says Jeffrey Schmid, President of the Federal Reserve Bank of Kansas City.

"Inflation has been above the Fed’s objective for nearly five years now. I don’t think we have room to be complacent. History has shown us that persistent inflation can shift the psychology around price-setting, and inflation can become ingrained. Were that to occur, re-anchoring inflation at 2% would be difficult and costly. It is unlikely that we would still be talking about soft landings."

Call for papers

We are seeking proposals for papers on the municipal bond market and state and local fiscal policy to be considered for the Municipal Finance Conference to be held in-person Tuesday, July 21, 2026 and Wednesday, July 22, 2026 in Washington, D.C.

About the Hutchins Center on Fiscal and Monetary Policy at Brookings

The mission of the Hutchins Center on Fiscal and Monetary Policy is to improve the quality and efficacy of fiscal and monetary policies and public understanding of them.