A central banker's recent essay raises a critical point: if the Fed continues slashing interest rates, monetary policy could edge into accommodative territory. And that's where things get thorny for inflation control.

The argument goes like this—push rates down too aggressively, and you risk losing your grip on inflation expectations. Markets start pricing in persistent price pressure. Once inflation psychology shifts, it becomes a headache to reset expectations later on.

This thinking matters for anyone tracking the macro backdrop behind crypto volatility. Rate decisions ripple through all asset classes. When policymakers signal caution about further cuts, it often signals they're worried about stoking inflation rather than fighting deflation. That's a different regime entirely.

The core tension here is real: keep rates higher to anchor inflation expectations, or cut to support growth and credit conditions. One path favors asset stability; the other fuels expansion but risks overshooting on prices.

For market participants, this signals the Fed's internal debate is shifting. Less emphasis on recession prevention, more focus on maintaining price credibility. That calculus shapes everything from yields to alternative assets over coming quarters.