FED NOTE：The Neutral Trap
ZMacro Research – Institutional Edition
February 2026
Executive Thesis
The Federal Reserve has entered what can be described as the Neutral Trap regime:
Inflation above target but declining
Labor softening but stable
Growth positive but slowing
Policy mildly restrictive
The Fed Funds rate remains:
3.50–3.75%
After roughly:
175bp of cuts since 2024
The Fed is now tr…
