The insurance rate cut has been issued. Telling the assembled members of the press this is nothing more than a "mid-cycle adjustment," Chairman Powell was cautious not to betray too much concern. The first rule of central banking is not to make anything worse. Subprime must always be contained.
Yet, he has the unenviable task of explaining what is a complete (and for many an unnecessary) 180-degree turnaround. Mere months ago, inflation and acceleration, an economy risking becoming too good. Now it needs a little insurance?
In his prepared remarks, Powell said as little as