U.S. Interest Rates are a litmus test of the world economy

One thing that affects global financial markets is the U.S. economy controlled by the U.S. Federal Reserve (Fed). If the U.S. economy is fine, the dollar weakens, and global capital markets rise.

The Fed controls the global economy by changing the key rate, which leads to periods of growth or decline called economic cycles.

An average cycle lasts six years and consists of three periods:
– a period of interest rates hikes
– a period of falling rates
– a period of steady rates

Now the U.S. economy is in a tightening cycle: the Fed started aggressively raising interest rates in March 2022—for the first time since the 1980-s. This might end either with the global growth of stock markets or at least another year of depression and a strengthening dollar.