Fed can not risks cut any further... and thats the new status quo.
1. What's Going On, Really? The Federal Reserve has started to edge away from peak rates, but the system is still living in a high-for-longer regime by any historical standard. After taking the federal funds target range to a cycle high of roughly 5.25–5.50%, the Fed has only recently begun cutting in 25 bp steps, bringing the range down to about 3.75–4.00% as of the October 2025 FOMC meeting. For households and traditional corporates, this shows up as slower credit growth and higher debt service. For the US private credit market and the banking system that funds and intersects with it, the impact is more structural: Private credit AUM has ballooned to roughly $3 trillion globally , up from about $2 trillion in 2020 and projected toward $5 trillion by the end of the decade, with North America accounting for the bulk of flows. Loans in this market are predominantly floating-rate, senior secured , and concentrated in leveraged borrowers that migrated away from traditional banks and syndicated loan desks after 2008 and again after 2020. US banks are not “outside” this ecosystem; they provide funding lines, derivatives, subscription facilities and hold exposures to non-bank lenders. Ne
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