Monetary policy decisions typically need 12 to 18 months to have any effect. That means they must forecast the unknowable at least a year ahead. That’s why rate cuts often happen only after it is clear the economy is already in the toilet, so to say.

We suddenly have a growth scare. The problem for the Federal Reserve is that inflation has come down a lot from the four-decade highs of 2022 but remains well above the two percent goal. This is likely to constrain their hands.