When Rate Cuts Begin, Will Everyone Really Make Money?
Every time news of a rate cut comes out, the stock market stirs, but I can't really feel that my life is getting better.
I heard that when an interest rate cut cycle begins, deposit rates fall first, while loan interest rates are reflected a few months later. In between, it feels like only the banks benefit.
Stocks also rise in advance on expectations of cuts, so when the cuts actually happen, they tend to fall as the catalyst fades—this pattern seems to repeat. I remember something similar during the last cycle.
In the end, from an individual's perspective, I conclude that my asset allocation and cash flow matter more than the direction of interest rates.
10 answers
Fr, deposit rates adjust immediately when rates drop, but why are loan rates so slow? lol
This is so true lol. It had already gone up before the rate cut announcement, so it feels like retail investors are always late to the party.
Well, that's a bit... The formula that rate cuts are always bullish for stocks doesn't really work these days. The reason for the cut could be a slowdown, so it's risky to just lump it under optimism. Even looking at 2008 or 2020, rate cuts didn't mean an immediate rise.