Interest Rates

When looking at monthly rate changes, our scorecard looks different to that of our normal scorecard, as extreme interest rate changes are actually historically associated with low levels of GDP growth.

This is because, when GDP growth begins to contract below 0%, the central bank will do absolutely anything to avoid deflation and historically the central bank cuts rates aggressively in response to recessions or economic crises.  

When the economy starts to rebound and experiences growth in GDP, post a contractionary period, the central bank has to then correct the aggressive cuts by raising rates by a similar magnitude, but at a slower pace, to make sure low rates doesn't cause out of control inflation.

We, therefore, do not score highly during periods of aggressive rate hikes that come out of post contractionary periods, as high levels of rate changes are during non-inflationary or deflationary periods.