Yield curve implications… The Economist

From The Economist, here:
“This time around, the Fed seemed to take the omen seriously. Over the course of 2019 it has first abandoned plans to keep raising rates (which had been going up since 2015), then cut its policy rate three times, reducing the effective rate from 2.4% or so to 1.55%. The yield curve was not the only thing on the mind of its chairman, Jerome Powell: cuts were also a response to a deepening slowdown in manufacturing and a plateau in the growth rates of prices and wages. But the central bank nonetheless responded faster and more fiercely to an inversion than it usually does. If rate reductions have in fact spared the American economy from recession, then Mr Powell, by reacting promptly to the yield-curve omen, may have actually weakened its predictive power. Few workers, or presidents, are likely to complain.”