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Why Lower Interest Rates May Not Fix America’s Job Market
Why Lower Interest Rates May Not Fix America’s Job Market
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The Federal Reserve's recent interest rate cuts aim to stimulate hiring, but structural labor market challenges—shrinking workforce participation and AI disruption—remain beyond monetary policy's reach. Policymakers face a dilemma: further cuts risk reigniting inflation, yet inaction could accelerate job market deterioration.
Northwestern University economist Martin Eichenbaum voices skepticism: "I don't see the types of weaknesses that interest rate cuts are really going to help." With inflation persistently above the Fed's 2% target for five years, the central bank's traditional toolkit appears increasingly blunt against modern economic complexities.
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