Here's Why The Federal Reserve Cutting Rates Could Be A Sign Of the Next Recession.
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While we often discuss the crypto markets, it’s also important not to forget about the general financial markets, which clearly have an overarching impact on everything. With that being said, whether you hold crypto or are watching from the sidelines, it’s evident that all markets have been influenced by the decisions of the Federal Reserve.
In recent years, everyone has been focused on how much and how fast the Federal Reserve would raise interest rates. However, I believe the real focus should be on when they start cutting rates, as this signals that things have gone wrong.
Stock Market During Previous Rate Cuts
In late 2008, the Fed slashed rates to zero in an unprecedented attempt to help the U.S. economy cope with the fallout from the 2008 global financial crisis. In 1998, the Alan Greenspan-led Fed cut interest rates to combat an economic downturn and sustain the expansion.
Both of these moves were followed by a large recession but were subsequently followed by continued growth. The market has grown substantially since, and it only saw a minor blip crash during the 2020 COVID crisis, yet it has not entered into a real lengthy market recession, which is a normal cycle, and which the Federal Reserve is clearly trying to artificially avoid, so China doesn’t surpass the U.S economy.
Fed Chair Jerome Powell, in his recent speech at Jackson Hole, specifically noted the conditions under which the Fed would raise rates further, implying
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