The latest Fed rate cuts have been making headlines, and opinions are divided on what this means for the economy. Essentially, the Federal Reserve lowered its benchmark interest rate to a target range between 4.75% and 5.00% with an aggressive half-point cut. This move is expected to benefit consumers with credit card debt, car loans, and home buyers, as well as stock market investors.
However, the question on everyone's mind is: will this prevent a recession? Historically, rate cuts have rarely been bullish for equities if they came after yield curve inversions, which reliably forecast recessions. The yield curve has been inverted since late 2022, suggesting that a recession might already be underway or will begin soon. Bottomline, be cautiously optimistic as you invest and be ready to eject.
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