I've heard many economists say that when rates fall the market will crash, how true can this be? because they supposedly discount that something bad is happening in the economy and that is why they lower interest rates.
A sharp fall of rates normally anticipates a deep recession. This will make investors reduce their holdings while insolvencies rise etc etc. The market crash is the bursting bubble that follows when the herd leaves the room, needs cash
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This is what usually happens, that is, there has never been a fall in interest rates without a recession, or I am wrong
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I do not remember any other important case.
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I don’t understand that reasoning either
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But this is what has usually happened during past interest rate cuts.
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33 sats \ 1 reply \ @TomK OP 3 Jul
The cut is the sign of weakness and normally follows after they broke a market or a segment like banks
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Bigger concern should be inflation
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