In this situation, one would expect to see an interest rate hike being accompanied by a decline in long-term rates.5 This brings me back to 1997.
The evidence that we gather from that episode is very difficult to rationalise and highly controvertible, especially because the financial crises in Asia and Russia – which took place around the same time – might blur the picture as we look back to those times. Overall, the evidence certainly warrants closer and better scrutiny.