BlockBeats news, on September 27, Wall Street Journal reporter Nick Timiraos, known as the mouthpiece of the Federal Reserve, said that whether the Federal Reserve’s interest rate cut can achieve a soft landing for the economy depends not only on how much weakness exists within the U.S. economy, but also on whether lower borrowing costs can be achieved. Stimulate new investment and spending to offset any economic slowdown.

Even if rates fall, many businesses and households may still be reluctant to borrow because they would face higher interest rates than they would on current fixed-rate loans, which were locked in years ago. If these borrowers or businesses are unwilling to take out new borrowing, rate cuts may do little to boost the economy.

Nick Timiraos points out that the problem is the difference between the marginal cost of debt (which is currently falling) and the average debt interest rate, which is likely to continue to rise, especially for borrowers who lock in low rates before the Fed starts raising rates. With the Federal Reserve rapidly raising interest rates after more than a decade of unprecedentedly low borrowing costs, average debt rates across many industries remain below the new marginal cost of credit, even as the Fed cuts rates.

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