Quote:
Originally Posted by eanzenberg
Thanks for this viewpoint, but I still don’t understand cutting rates with an expected 2.9% inflation rate. GDP and unemployment both look good, so I still fail to see why cutting rates won’t ramp inflation back up, especially since the last percent will be hardest and longest to come down.
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The reason is the transmission of rate policy through the economy isn’t instantaneous. That means the peak level of rates has yet to be fully felt. Particularly because of the excess savings position.
There are some other technical reasons but I doubt most care enough to understand those details.