Central Banks and Money
82hot
Now 33% | Data for Sep 2026
Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.
What it is
Among about 40 central banks, the number with higher policy rates than 6 months earlier minus the number with lower rates, as a share of the total.
The higher the number, the more central banks are tightening. Central banks turning together often marks a turning point in the business cycle.
Central banks with a higher rate than 6 months earlier minus those with a lower rate, divided by the total number of central banks; higher = more central banks raising rates.
Where it stands now
coldcoolneutralwarmhotHatched = earlier periods that were also hot
When it was here before
US stocks after it began, cumulative1 yr2 yr3 yr
For each period, the changes 1, 2 and 3 years after it began are cumulative and measured from its first month; “What happened next” is measured from every hot month, so the two give different numbers. The events named beside each period are major events of that time, not necessarily related to the readings here.
What happened next
Bars: median cumulative changeEarlier months with Net share hiking hot, excluding the current period (145)All months (742)
Median of the deepest drop below the starting month within the next 5 years: −12.2% for months with Net share hiking hot; −7.8% for all months.
The hot months come from a small number of market episodes (15), and neighboring months are not independent events; rises and falls are all listed. This is the historical record, not a forecast. “US stocks” means the S&P 500 price index compiled by Professor Shiller (monthly average, excluding dividends).
| Median position | Back to neutral (40–60) | Still hot or more extreme | |
|---|---|---|---|
| 1 yr later | 47neutral | 15% | 26% |
| 3 yr later | 34cool | 14% | 18% |
| 5 yr later | 46neutral | 22% | 23% |
Has hot or cold lined up with later returns?
1964–2021: average yearly change in US stocks over the next 5 years
In this period, the hotter the month, the lower the average over the next 5 years. The months overlap, so there are really only a few market episodes. This is a tendency, not a rule, and not a forecast.
What it is linked to
Fed funds ratetoNet share hikingCommon explanation: Ripple · same direction
Once the Fed changes course, other central banks often follow
This issue: Fed funds rate at 72 (warm), Net share hiking at 82 (hot) — both above normal, in line with the common explanation.
Weak or inconsistentAgreement +0.19 · in step in 36 of 47 5-year periods
Values
Data and sources