FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.

posted on 18 June 2016

The Rate Hike Cycle That Wasn't

from Lakshman Achuthan, Co-Founder and Chief Operations Officer of ECRI

In summer of 2015 we declared that the "Fed's rate hike plans are on a collision course with the economic cycle." This was because the Fed was pressing for the long awaited "liftoff" from the zero lower bound at a time when ECRI's leading indexes were pointing to a cyclical slowdown in U.S. economic growth, i.e., a growth rate cycle (GRC) downturn.

On December 16, 2015, the Fed did push through a rate hike in the face of a continuing slowdown in U.S. economic growth. The following day, we informed our members that, "[w]ith the GRC downturn set to deepen, a full-blown rate hike cycle remains improbable" (U.S. Essentials, December 2015). Please recall that, at the time, both the Fed and prominent Wall Street houses were projecting an additional four to five rate hikes in 2016.

The attempt at a rate hike cycle has been exceptionally ill-timed, starting a full year inside of a cycle slowdown - the longest lag ever between the start of a GRC downturn and the beginning of a Fed rate hike cycle. Now - no matter what - we would have seen the longest lag ever between the first and second Fed rate hikes.

Meanwhile, as we had expected, the slowdown has continued through the first half of 2016. Amidst slowing global growth we therefore reiterated in early June that a "rate hike cycle remains unlikely."

It is in this context that, before Chair Yellen's recent press conference on Wednesday, we explained that, "Unless a growth rate cycle upturn begins to take shape, its [the Fed's] next move may well end up being a rate cut."

The Fed and the consensus of economists did not foresee the "headwinds" that have effectively scuttled the Fed's rate hike plans. This is because they were oblivious to the direction on the economic cycle, which remains the unwavering focus of ECRI's leading indexes.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.

You can also comment using Facebook directly using he comment block below.

Econintersect Contributors


Print this page or create a PDF file of this page
Print Friendly and PDF

The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.

Take a look at what is going on inside of
Main Home
Analysis Blog
Rising Tide Does Not Lift All Ships
Comments on Feyerabend’s ‘Against Method’, Part II
News Blog
New Seasonal Outlook Updates from NOAA and JAMSTEC - Let's Compare Them.
Infographic Of The Day: Driving Into A Battery Powered Future
Earthquake Risk - Location Matters
Investor Alert: Be On The Lookout For Investment Scams Related To Hurricane Matthew
Lost In Translation: Five Common English Phrases You May Be Using Incorrectly
The Size And Scope Of Samsung's Business
Immigration Is The Top Worry For Britons
People Killed By Russian Airstrikes In Syria
Have You Taken These 4 Simple Steps To Improve Your Trading?
14 October 2016: ECRI's WLI Growth Index Insignificantly Declines
Mom Breaks Down In Tears When Son With Autism Meets Service Dog
Rail Week Ending 15 October 2016 Paints A Negative Economic View
What Is The New Normal For U.S. Growth?
Investing Blog
FinTech Is Taking A Bite Out Of Banks
Options Early Assignment - Should You Worry?
Opinion Blog
US 2016 Election: Will US-China Relations Change
Prop. 51 Versus A State-Owned Bank: How California Can Save $10 Billion On A $9 Billion Loan
Precious Metals Blog
How Will The Election Outcome Impact Precious Metals?
Live Markets
21Oct2016 Market Close: Major US Indexes Close Flat On Low Volume, Crude Prices Resume Climb, US Dollar Stabilizes In Mid 98 Handle, Yes, Most Investors Are Worried Which Way This Market Will Go
Amazon Books & More

.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Middle East / Africa
USA Government

Crowdfunding ....



Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved