The main concern of central banks is the real economy and not the ups and downs of the stock market except, of course, when what happens in the capital markets can have a negative impact over the real economy.
I think the difficulty here is that a possible rate cut can be either too late or too soon as there seems not to be a clear case.
One important concept to have in mind is that of the NAIRU.
"The NAIRU is the lowest unemployment rate that can be sustained without causing wages growth and inflation to rise. It is a concept that helps us gauge how much ‘spare capacity’ there is in the economy. The NAIRU cannot be observed directly....
A key indicator of spare capacity in the economy is the difference between the NAIRU and the unemployment rate – sometimes known as the ‘unemployment rate gap’ (and also referred to as the ‘unemployment gap’). Even though we cannot directly observe the NAIRU, if wages growth and inflation are decreasing, there is likely to be spare capacity in the economy; we can conclude that the unemployment rate is above the NAIRU. On the other hand, if wages growth and inflation are increasing, there is likely to be insufficient capacity in the economy; we can conclude that the unemployment rate is below the NAIRU. When there is no unemployment rate gap, the NAIRU is equal to the unemployment rate consistent with the economy operating at its full capacity..."
