03 May 2023 1 min read

Chart of the month: Federal Reserve interest rates and financial market crises

By Christopher Teschmacher

When interest rates go up, shallow cracks can often open up into gaping holes...


Central banks are determined to get inflation under control. But as the chart shows, when interest rates go up, shallow cracks can often open up into gaping holes.

Eventually, tighter monetary policy will get into these cracks, and with a lag there are often crises, recessions or both, eventually forcing central banks to cut rates again.

We’ve already had one such crack exposed, which toppled SVB in the US and Credit Suisse in Europe. But with inflation proving sticky, central banks are unwilling to relieve the pressure

The worst may still be to come.

Christopher Teschmacher

Fund Manager

Chris is something of a perfectionist which may explain the raft of automated spreadsheets ensuring charts are properly formatted to Teschmacher® standards. Having become the resident quiz master, he keeps his colleagues on their toes with a steady stream of investment trivia. This worldly Dutchman has wanderlust in his blood – he was born in Australia and has lived in London, New York and Paris. He has since settled in London with his young family, although regular trips to the South of France suggest that ambitions to become a vineyard owner are still strong.

Christopher Teschmacher