Is the Fed’s 50 basis point rate cut about to kick off a bull market? Hold on! Historically, Fed rate cuts are often accompanied by recessions, and a bull market is only likely to emerge if the US economy avoids a downturn! This chart explains the history of Fed rate cuts and their macroeconomic contexts!
| Year-Month | Rate Cut | Successful Trigger of Bull Market? |
| July 1990 | -25bp (Total -50bp) | ✔️ |
| Context: Following a rapid rate hike cycle, a rate cut of 25bp occurred in July, with another 25bp in February 1991 | ||
| July 1995 | -25bp | ❌ |
| Context: Despite economic slowdown and a 3% rate cut | ||
| September 1998 | -25bp | ❌ |
| Context: Faced with international financial crises, a 3% rate cut was made | ||
| January 2001 | -50bp | ✔️ |
| Context: In response to a stock market crash, a 50bp cut was made, followed by another 50bp, totaling 13% in rate cuts | ||
| September 2007 | -50bp | ✔️ |
| Context: Amid a housing crisis, a 50bp cut was made, totaling 10% in rate cuts | ||
| July 2019 | -25bp | ❌ |
| Context: “Mid-cycle adjustment” rate cut amid economic growth, totaling 3% in rate cuts | ||
| March 2020 | -50bp | ✔️ |
| Context: Amid the pandemic, a rapid 50bp rate cut occurred, followed by a total 100bp cut by the FOMC |
