Understanding Federal Reserve rate cycles: Lessons for investors
The Federal Reserve’s (Fed) approach to rate adjustments has consistently challenged market expectations, offering important lessons for investors navigating monetary policy cycles. Historically, the disconnect between market predictions and the Fed’s actual actions has been a recurring theme, often leading to surprises that reshape investment strategies. Analysts caution that the central bank may still be “behind the curve,” implying that its future policy adjustments could be more aggressive or profound than anticipated. Over the decades, investors have often struggled to accurately predict the trajectory of interest rates. Since 1990, there have been six significant rate-cutting cycles, with markets underestimating the magnitude of cuts in four of them: 1990, 2000, 2007, and 2019. Only ...