The first 1/4 of a percent cut occurred.
Will the Fed follow the 2008 path.
Suppress interest rates so debt service costs ease, increase the money supply and credit to prop up asset bubbles in stocks and housing, and thereby generate growth in consumption via the elixir of “the wealth effect:” as assets loft higher, everyone feels richer and so they borrow and spend more.
OK that benefits largely the top 10%. But they do 50% of the consumption of consumer goods & service. That should keep the economy afloat.
The odds are that there will be more to come as the effective rate is still restrictive.
With data through 2025:Q2, the model estimates the implied (medium-run) nominal neutral interest rate to be 3.7 percent, with a 68 percent coverage band ranging from 2.9 percent to 4.5 percent. Given that the effective nominal federal funds rate is currently in the range of 4.25 percent to 4.5 percent, this model estimates with a high level of certainty (77 percent probability) that the policy stance is in restrictive territory.
