These two facts might strike some as being in tension—normally we want the Fed to cut interest rates to stimulate a weak economy. Why then, if the labor market is quite strong, do we need them to cut? 🧵2/5

Simply put, the Fed's interest rates are now at highly contractionary levels—they are rates you'd want if your goal was to substantially slow the pace of aggregate demand growth (say b/c you were trying to quickly reduce inflation). Today’s economy does not need that. 🧵3/5