Many are wondering what the market will look like in the future with rising interest rates and the prospect of a recession.
Let's take a look at what happened with the economic downturn in the past few decades.
When a recession begins, interest rates rise. However, if the recession continues, the interest rate will be lowered to revive the economy, that is, to encourage economic activity.
This is shown in the table below, when the interest rates changed during the official recession from the 1980 recession to the 2019 Covid-19 crisis.
As you can see, interest rates have gone down during the six recessions in the last 40 years or so. The average is down 1.8%.
In my view, even if the recession that everyone expects comes in the second half of this year (or next year) happens, the interest rate will eventually come down slowly and become an aid to overcome the recession.
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