kyzr
Diamond Member
Lowering rates below the neutral rate is expansive/inflationary, the current 4.5% rate Is restrictive.As explained… and as you noted… the Fed also watches inflation (which is climbing ) . Lowering rates raises inflation
"The neutral rate for the Federal Reserve, which is the interest rate that neither stimulates nor restricts economic growth, is currently estimated to be around 2.5% to 3.5%. This rate can change based on economic conditions and is used as a guide for setting monetary policy."
There is justification to start lowering rates.
