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How will the market react when the Federal Reserve cuts interest rates?
In recent weeks, it’s become clear to me that the US is very likely to avoid recession and the US Federal Reserve (Fed) is very likely to begin cutting rates, and so my thoughts have increasingly turned to the 1994-1995 tightening cycle. I think we could all categorize it as a success story because it did not end in recession. While history doesn’t usually repeat itself, it often rhymes, so I’m hopeful there are lessons to be learned by studying what happened to markets as the Fed began to cut rates in 1995. First, I think it’s important to establish the timeline1: Between February 1994 and February 1995, the ... (full story)