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13-06-2024, 06:13 AM
European central banks have cut rates. It uses a new way to measure inflation and decided it is time to cut.
Based on this same measure, the US side also should be cutting rates right now. But the FED does not use the same method of measuring inflation.
Some.background on why Euronezone side already cut rate is this. In the past inflation numbers like CPI actually lag what is happening by 3-6 months. That is why when the inflation drops to target the economy already enter recession. So the European central banks decided to avoid past mistakes and use the new way to measure which has less lag.
In past rate hike cycle, the economy looks strong than suddenly within a short span weaken quickly and enter recession then FED start to cut rates. As it cuts recession worsen and stocks sink hence it is found that past rate cits coincide with fall in interest rates.
https://www.investors.com/news/economy/f...ell-sp500/
Based on this same measure, the US side also should be cutting rates right now. But the FED does not use the same method of measuring inflation.
Some.background on why Euronezone side already cut rate is this. In the past inflation numbers like CPI actually lag what is happening by 3-6 months. That is why when the inflation drops to target the economy already enter recession. So the European central banks decided to avoid past mistakes and use the new way to measure which has less lag.
In past rate hike cycle, the economy looks strong than suddenly within a short span weaken quickly and enter recession then FED start to cut rates. As it cuts recession worsen and stocks sink hence it is found that past rate cits coincide with fall in interest rates.
https://www.investors.com/news/economy/f...ell-sp500/
I, being poor, have only my dreams; I have spread my dreams under your feet; Tread softly because you tread on my dreams.
