🔥 With interest rates reaching neutral levels, how much can the Federal Reserve lower them in 2026?
🔥 The Federal Reserve's own signal that monetary policy is now close to neutral has raised the ceiling for expectations of further interest rate cuts next year, indicating that markets should expect tightening rather than rescue.
🔥 The Federal Reserve's division near the neutral level is a warning sign.
Periods when policy is close to neutral typically require a unified Federal Open Market Committee, as mistakes in either direction can have significant consequences. Overly aggressive cuts risk reigniting inflation, especially with many expecting fiscal policy to become more expansive next year under President Donald Trump.
🔥 However, the recent meeting highlighted increasing divisions among Federal Reserve officials, raising questions about policymakers' confidence in their own forecasts.
🔥 With attention focused on the neutral interest rate, another danger looms: that the Federal Reserve may eventually have to turn completely away from easing.
🔥 Optimists say there are two rate cuts in 2026, but I say the new Federal Reserve Chair will have a different role, and thus the current expectations are premature $BTC $SOL $ETH
