The Fed funds rate is currently 4.08%. Imagine that the FOMC…
The Fed funds rate is currently 4.08%. Imagine that the FOMC is equally nervous about each part of their dual mandate. Then, imagine that the FOMC lowered their view of the neutral rate from 3% to 2%. This change in their perceived neutral rate is likely to increase the chances that the FOMC will ___ the Fed funds rate.