Rate cuts do not necessarily guarantee a soft landing. The inflation indicator PCE, which is favored by the Fed, has cooled down as expected. After the data was released, the Fed's mouthpiece said: rate cuts do not necessarily lead to a soft landing. What information does he want to reveal or express?
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Nick's general meaning is: after the epidemic, due to low interest rates, most American households and large and medium-sized enterprises have locked in a large number of low-interest loans. In the current environment, the loan costs for households and enterprises are very low, and the average interest rate is lower than the Fed's interest rate.
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At present, the Fed's rate cuts reduce the cost of borrowing. Even if the Fed successfully lowers the interest rate, many companies and households may not borrow. The reason is that the interest rate will be much higher than before.
The insinuation is that the role of the interest rate cut stimulus is to allow more households and businesses to borrow. If the effect is not obvious, the current state of bank lending has stopped and cannot make it active, which will affect the future economic recovery.
