Outside the Box
A buildup in leverage would make the financial system more vulnerable and susceptible to shocks
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The Federal Reserve lowered its policy rate by a quarter-point last week, noting that a shift in the balance of risks to its dual mandate of maximum employment and stable prices warranted what Chair Jerome Powell called a “risk-management cut.” In addition, the “dot plot” in the Summary of Economic Projections pointed to two additional cuts by the end of the year and one more next year, for a total of 1% by the end of 2026, according to the median projection.
With conditions in the U.S. labor market cooling, the Federal Open Market Committee judged it appropriate to take a step in returning to a more neutral policy stance, even though inflation is still well above the 2% target.
This post was originally published on Market Watch
