The Federal Reserve has reached an important inflection point. Vice Chair Philip Jefferson recently highlighted that current interest rates are hovering near neutral territory—essentially striking a balance where policy neither accelerates nor decelerates economic activity. This positioning gives policymakers considerable flexibility to fine-tune their approach as new economic risks emerge. The neutral rate concept matters significantly for market participants, as it signals potential shifts in monetary policy direction. When rates sit at neutral, the Fed can pivot more nimbly in either direction depending on inflation trends, employment data, or broader financial conditions. For traders and investors monitoring macro conditions, this statement underscores that rate hikes may have plateaued, while rate cuts remain contingent on how economic risks develop in the coming months.