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Crypto News – Critical Analysis: Rate Hikes Found to Precede 11 out of 14 U.S. Recessions

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Crypto News - Critical Analysis: Rate Hikes Found to Precede 11 out of 14 U.S. Recessions

Crypto News- The looming end of the rate-hiking cycle has set off alarms among financial circles, with concerns swirling about an impending recession. Drawing from insights shared by QE Infinity, backed by historical data from Rosenberg Research, a troubling pattern emerges: out of the 14 rate-hiking cycles the U.S. has undergone since 1950, a staggering 11 have culminated in recessions. Miraculously, recessions were dodged in 1966, 1984, and 1995, but the odds seem stacked against such luck this time.

Critical Analysis: 11 of 14 Past U.S. Recessions Tied to Rate Hikes

In the current cycle, the Federal Reserve has cautiously steered interest rates to 5.33% since August 2023, maintaining this level over nine consecutive meetings. Comparisons to the lead-up to the 2008 recession are unnerving; back then, the Fed held rates at 5.25% for a year before the economic storm hit.

Central Banks Face Balancing Act Amid Economic Uncertainty: CME FedWatch Forecasts Rate Cuts for 2024

Striking a balance between taming inflation, managing unemployment, and fostering growth has become increasingly challenging for central banks worldwide. The situation has prompted the CME FedWatch tool to forecast two rate cuts in 2024, potentially driving the federal funds rate down to 4.75% – 5.00% by year-end.

The Dual Edge of Rate Hikes: A Historical Perspective on Economic Contraction

While rate hikes are a customary weapon in the arsenal of central banks to rein in inflation, the grim reality portrayed by historical data suggests that they often usher in economic contraction as a byproduct.

FAQs

What historical data supports the concern about an impending recession?

Historical data from Rosenberg Research, shared by QE Infinity, indicates that out of the 14 rate-hiking cycles the U.S. has experienced since 1950, 11 have resulted in recessions.

How has the Federal Reserve managed interest rates in the current cycle?

Since August 2023, the Federal Reserve has maintained interest rates at 5.33%, holding steady over nine consecutive meetings.

Are there any parallels between the current situation and the lead-up to the 2008 recession?

Yes, comparisons are drawn to the 2008 recession, where the Fed kept rates at 5.25% for a year before the economic downturn occurred.

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Crypto News - Critical Analysis: Rate Hikes Found to Precede 11 out of 14 U.S. Recessions

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