Wall Street welcomes rate cuts but ignores the risks

Investors are celebrating interest rate cuts that have yet to happen following Federal Reserve chair Jerome Powell's Jackson Hole speech, which opens the door to a September rate reduction.

Why it matters: Wall Street may be ignoring risks associated with a quarter-point rate cut next month that could stick around to haunt investors later on.

What they're saying: There's not going to be a swift return to the near-zero interest rate environment of recent years, Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America, tells Axios. • The central bank's neutral rate will look more like that of the 1980s and 1990s. The market may need to "recalibrate everything to acknowledge that rates are likely to remain at higher levels," she says. • The market is not pric