By Elliott Wave International
Before every Fed meeting, investors and pundits wait in a state of high alert. Will the Fed raise rates? Cut them? Do nothing?
They are wasting their time.
The Fed doesn’t control interest rates; it’s the other way around.
History shows that the T-bill market moves first — and the Fed follows.
On August 30, 2007, Elliott Wave International used this reliable relationship to forecast a dramatic rate cut. Three weeks later, the Fed fulfilled their prediction. And they kept doing so until T-bill rates bottomed. This chart shows how the Fed’s rate constantly lags the T-bill rate.
This relationship has held true for decades. And not just in the U.S. – but in Europe, the U.K., and Australia, too.
Chapter 3 of The Socionomic Theory of Finance tells the full story of markets’ global dominance of interest rate policy. Read it &mdash FREE — for a limited time.
This article was syndicated by Elliott Wave International and was originally published under the headline Proof That the Fed Doesn't Control Interest Rates. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
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