Fed Preview: Be Quick, but Don’t Hurry

The American coach John Wooden was famous for his “Pyramid of Success.” International audiences became acquainted with its contents through the television series “Ted Lasso.”

One of Wooden’s bromides, borrowed for this commentary’s title, encourages action rooted in firmness of conviction. It discourages rash movements that might be regretted later on. As the Federal Reserve gathers to contemplate American monetary policy next week, they will do well to keep Wooden in mind.

The September 18 decision is nearly certain to yield the first in a series of rate cuts, but the structure of the easing cycle is up for debate. Should the Fed move gradually, or front-load its actions to offer more rapid relief? Here is our analysis of the points of debate which may arise next Tuesday and Wednesday, and in meetings to follow.

Economic Growth

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The U.S. economy might appear to be on the brink of a recession, with an inverted Treasury yield curve and the Sahm Rule triggered by rising unemployment. But as we highlighted here, previously reliable recession indicators have not worked in this cycle.