econintersect.com
       
  

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 25 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


search_box

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 Econintersect.com
Main Home
Analysis Blog
Energy and Falling Productivity
Reinhard Selten: Pioneering Analyst of Rationality and Human Behaviour
News Blog
Super Mario, The Timeless Bestseller
Explainer: The Nine Swing States That Will Decide The Next US President
How Long Does Apple Support Older IPhone Models
What We Read Today 25 September 2016
Dangerous Ultra Pure Water
Job Employment Tenure Down
Mobile Payments Promise To Improve Financial Accessibility In Mexico
Aging Populations May Mean Lower Economic Growth
Urban Rebound Causes Large Shift In Lower Credit Borrowers To Seek The Outer Suburbs
Infographic Of The Day: How Oil Is Formed
Early Headlines: Japan Needs Fed Hike, Mexico Tanker Ablaze, 1.5C Limit Within 10 Yrs, Africa's Growth Problems, Did US Destroy Syria Truce?, Merkel: No Help For DB And More
Americans Wary Of Drone Delivery
Britain's Wealthiest Households
Investing Blog
We're Back Here We Started
The Week Ahead: How Will Election News Impact The Market?
Opinion Blog
What If We're In A Depression But Don't Know It?
There's No Wall Between The Fed And Banco De Mexico
Precious Metals Blog
War On Cash Turns To $20, $50, And $100 Bills
Live Markets
23Sep2016 Market Close: US Indexes Close Lower As Crude Prices Slip, Fed Lowers Economic Growth Prospects, Indicators Melting Into Bearish Territory
Amazon Books & More






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



Crowdfunding ....






























 navigate econintersect.com

Blogs

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

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com 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