I would ask first what the price of borrowing actually tells us. The article reports that the Fed lifted its rate by only a quarter point, yet traders now expect another hundred basis points of tightening by next summer, and the thirty-year mortgage has climbed to 7.45 percent. The small official move and the larger market response are not the same thing, and I would not confound them. What matters is the arrangement of credit: the legal or official rate sets a floor or a ceiling, but the price people actually pay is governed by what can be made by the use of money and by the risk the creditor runs.
When the law fixes a rate below the lowest market rate, the effects are nearly the same as a total prohibition. The creditor will not lend for less than the use of his money is worth, and the debtor must pay for the risk of accepting that value. So a rate that is held down does not prevent the charge; it drives the transaction toward those who can give the best security, or toward exorbitant lenders. The article gives me no evidence that any rate is being fixed below the market, and I would not invent such a cause. I would only distinguish the official rate from the market rate, and observe that the movement in mortgages and Treasuries is where the real price of credit is being discovered.
I would also note the difference between borrowing that can be recalled and borrowing that cannot. The article describes a Treasury attempt to calm markets that had little effect, and traders pricing further tightening. In my account of public funds, a creditor who lends to government receives a perpetual annuity rather than a right to demand the capital back, and the security and punctuality of that interest can make the annuity sell above par. That is a different bargain from a private loan. I would not conclude from the article that any particular cause explains the selloff; I would say only that the terms on which money is lent, and the security behind it, are what determine the rate.
