📉 If the Federal Reserve lowers interest rates in 2025, it does not guarantee asset rises; on the contrary, history shows that risks can increase.
💡 The chart above reveals an important pattern:
Over the past fifty years, the largest market declines have come after the start of interest rate cuts, not before.
🔍 Historical examples:
• 1973: Decrease of -36%
• 1980: Decrease of -48%
• 2000: Decrease of -51%
• 2008: Decrease of -58%
• 2020: Decrease of -35%
These declines occurred after the Federal Reserve changed its direction, moving from monetary tightening to monetary easing, known as a pivot shift. But why?
But this does not necessarily mean that lowering interest rates is a sign of comfort; rather, it is a response to an already existing problem: a bursting bubble, or an economic recession on the radar, or financial instability.
📊 No cuts have been made in 2025 so far, just indications. If this happens in the next few months, it may support the market for a while. But with:
• Inflation is still ongoing
• Consumption slowdown
• Escalating geopolitical tensions
...the risk is still present in the game.
⏱️ The effect of lowering interest rates is not immediate.
Historically, the real effect may take several months to appear.
⚠️ Lowering interest rates is not a green light to go out and buy everything.
It is a warning that the cycle is changing, which requires more wisdom and not euphoria.
Do you think that the cuts in July will have positive effects, or do you think they might bring fear? Comment 👇
