The Fed verdict & historical implications of interest rate movements
By Yaser Anwar, CSC of Equity Investment Ideas
The Fed will raise short-term interest rates by one-quarter point for the 17th consecutive time on Thursday.
Also widely predicted by many analysts is the belief the Fed could be overdoing the current rate hike cycle, leading to a potential economic slowdown in the second half of this year or early in 2007.
According to the Sunday, June 25 edition of NYT, Standard & Poor’s chief investment strategist, Sam Stovall, recently studied what he called the “plateau period,” or what he described as “the time between a Fed rate increase and the first in a series of interest rate cuts.”
Stovall pointed out that “Since 1971, there have been eight such turning points in the economy. On average, the time between the end of the tightening cycle and the start of a new easing cycle has been only 7.3 months. Twice in recent history, the Fed raised rates only once before easing.”
Stovall further observed that “If you take out those one-and-out situations, the spread between the last hike and the first decline is only 5.5 months, on average.”
http://www.equityinvestmentideas.blogspot.com/
The Fed will raise short-term interest rates by one-quarter point for the 17th consecutive time on Thursday.
Also widely predicted by many analysts is the belief the Fed could be overdoing the current rate hike cycle, leading to a potential economic slowdown in the second half of this year or early in 2007.
According to the Sunday, June 25 edition of NYT, Standard & Poor’s chief investment strategist, Sam Stovall, recently studied what he called the “plateau period,” or what he described as “the time between a Fed rate increase and the first in a series of interest rate cuts.”
Stovall pointed out that “Since 1971, there have been eight such turning points in the economy. On average, the time between the end of the tightening cycle and the start of a new easing cycle has been only 7.3 months. Twice in recent history, the Fed raised rates only once before easing.”
Stovall further observed that “If you take out those one-and-out situations, the spread between the last hike and the first decline is only 5.5 months, on average.”
http://www.equityinvestmentideas.blogspot.com/
posted by douglas mcintyre at 5:13 AM
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