Longest FOMC Rate Pauses and Market Performance: 1960-Present

Jan.30.07 | About: SPDR S&P (SPY)

With the market pricing in virtually no chance of any Fed actions between now and at least September, we wonder if being a Fed official is one of the cushier jobs a person can have. After all, if the market's expectations bear out, the Fed will have gone over a year without doing anything! In fact, if they stay on vacation hold until September, this will rank as the eighth longest stretch the Fed has gone without changing what was its key interest rate at the time.

In the table below, we summarized each of the longest pauses by the Fed, as well as how the market performed during each period. We would remind readers that each of these periods is at least a year, so while the overall results are certainly positive, they are not too far out of step with the long term average annual return of the market (approximately 10%).

click to enlarge

FOMC pauses