Regarding whether there will be an interest rate cut in 2024, Federal Reserve officials have recently expressed different opinions, emphasizing that the decision still depends on inflation data. But have you ever thought about whether a rate cut by the Fed is really good news for the market? From history, what can we discover?
(Background:
Interest Rate Freeze Again: Federal Reserve’s Decision on Interest Rates in Early May
)
This article discusses the following:
1. Two factions within the Federal Reserve
2. Comparison chart of S&P 500 and US interest rates
3. Short-term market volatility and long-term upward trend
4. The Federal Reserve’s decision to maintain the federal funds rate at 5.25% to 5.5% for the sixth consecutive time
5. The existence of two factions within the Federal Reserve, one concerned about maintaining rates at a high level for too long and the other believing that there is no need for a rate cut this year due to strong economic performance
6. The need to further analyze inflation data to determine whether there will be a rate cut this year
7. The historical correlation between S&P 500 and US interest rates, with examples such as the COVID-19 pandemic in 2020, the financial crisis in 2008, and the dot-com bubble in 2000
8. The different market reactions to rate cuts in the past and the need to observe the real situation over time
9. The reminder to investors that although historically rate cuts have been positive for the market in the long run, short-term fluctuations are unpredictable and it is important to manage risks properly.
Please note that the translation may not be an exact word-for-word translation, but it accurately conveys the meaning of the original article.