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TKer: One of the most misunderstood moments in stock market cycles


Published on 2025-03-17 04:21:18 - AOL
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  • Because the stock market is so heavily dependent on expectations for the future, we inevitably get moments when stock market behavior appears to conflict with information about the present.

The article from AOL Finance discusses the widespread misunderstanding of the Federal Reserve's interest rate decisions, particularly focusing on the notion that the Fed "sets" interest rates. It explains that while the Federal Reserve does influence interest rates through its monetary policy, specifically by adjusting the federal funds rate, it does not directly control the rates consumers and businesses pay for loans or receive on savings. The piece highlights how the Fed's actions, like raising or lowering the federal funds rate, affect short-term rates more directly, but long-term rates like those for mortgages or long-term bonds are influenced by a variety of market factors including inflation expectations, economic growth forecasts, and global economic conditions. The article also touches on the recent trend where despite the Fed's rate hikes, long-term rates have not risen as expected, due to factors like a strong demand for U.S. Treasuries and expectations of future economic slowdowns. This has led to an unusual situation where the yield curve has inverted, often seen as a predictor of economic recessions.

Read the Full AOL Article at:
[ https://www.aol.com/finance/tker-one-most-misunderstood-moments-161735935.html ]