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Historically, a recession follows shortly AFTER the fed starts cutting rates. See also: https://fred.stlouisfed.org/series/T10Y2Y/ https://fred.stlouisfed.org/s
by spqrr 2y ago
Historically, a recession follows shortly AFTER the fed starts cutting rates. See also: https://fred.stlouisfed.org/series/T10Y2Y/ https://fred.stlouisfed.org/series/T10Y2Y/
The grey areas are recessions.
- fauigerzigerk 2y ago>See also: https://fred.stlouisfed.org/series/T10Y2Y/ https://fred.stlouisfed.org/series/T10Y2Y/ The grey areas are recessions This chart shows (part of) the yield curve, not the Fed funds rate. Did you mean to show this? https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/FEDFUNDS
- spqrr 2y agoI guess that would have been more correct, yes. It shows the same pattern in any case.
- fauigerzigerk 2y agoWhat it shows is that the Fed starts cutting rates shortly before or shortly after a recession begins, exactly as you would expect. In some cases they started raising again too early and had to backtrack.
- wakawaka28 2y agoThey often cut rates when a recession is in sight, and raise them when they think the market will handle it. I don't think cutting rates directly causes recessions. Interest rates are still too low but they are about to be cut to save the banks which invested in low interest bonds, presumably.