TechFlow, Nov 25 — Reuters columnist pointed out that if overly optimistic concerns about artificial intelligence continue to escalate, turning recent market volatility into more severe turbulence, financial stability risks triggered by a sharp decline in asset prices could force the Federal Reserve to cut interest rates. Of course, this is not the baseline scenario. Traditionally, the Fed would not intervene to calm markets unless liquidity dries up or market functioning is impaired. Although market sentiment and performance have clearly deteriorated, we are still far from a crisis, especially after Friday's rebound. However, this time the Fed may not need to wait until conditions worsen to that extent before taking action. The reason is that, according to calculations by many economists—and even acknowledged by some policymakers—the health of the "real economy" today depends more than ever on Wall Street wealth. (Jinshi)
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