Fed Hamak: Further interest rate cuts may pose risks to financial stability

On November 20, Cleveland Federal Reserve Bank President Harmack warned that further drops in interest rates would pose widespread risks to the economy. Given that inflation remains above the Fed's 2% target, “lowering interest rates to support the labor market could prolong this high inflation period, while also encouraging risk-taking behavior in financial markets.” Harmack pointed out that the current financial environment is “quite loose” in the context of rising stock prices and “loose” credit conditions, explaining that in this situation, further drops in credit costs “could support high-risk loans.” ( Jin10 )