Fed minutes: too late or too early rate cuts are risky

A number of participants emphasised that reducing the restrictiveness of policy too late or too little could run the risk of unduly weakening economic activity and employment. In particular, some participants highlighted the costs and challenges of addressing such a weakening scenario once it had fully begun. Several participants, however, also suggested that reducing the restrictiveness of policy too soon or too much could lead to a stalling or reversal of progress in the fight against inflation. Noting that uncertainty about the level of the long-run neutral interest rate complicated the assessment of the extent of policy constraints, some participants argued that a gradual reduction in policy constraints would be appropriate.