Don’t let interest-rate predictions dictate your investment decisions

AT FIRST glance, it sounded like good news. Last Friday (Jan 10), the US labour department said that job growth surged in December, while the unemployment rate was lower than forecast. Curiously, the stock market wasn’t celebrating.

According to market watchers, a healthy economy could mean fewer interest-rate cuts on the horizon – and that’s not good news for Wall Street. The market reacted swiftly, plunging last Friday as investors grappled with the implications.

Sequences such as this suggest that interest-rate predictions can influence the stock market’s direction. Hence, it stands to reason that investors need to pay attention to forecasts or risk finding themselves on the losing end. At least, that’s what the market wants you to believe.