The Fed Interest Rate Level That Cripples Economic Growth Is Getting Lower And Lower. “Lower for longer” indeed

Conventional wisdom says, we are finally facing the real countdown to the Fed’s first interest rate increase
Tthe threshold for where interest rates risk pushing the US economy into recession has been falling over the last thirty years
This pattern reflects lower trend growth and rising leverage — both of which tend to reduce the ‘neutral’ policy rate
The peak in the real Fed funds rate required to trigger recession will likely make a new low. 1% real could cripple growth. Worse, if the peak in rates is so low, it will leave the Fed little room to battle the next downturn

Minack Chart


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