The widespread belief that interest rates fall in presidential election years is false, according to Paul W. Boltz, chief economist of T. Rowe Price Associates Inc., Baltimore.
Although presidents might want falling interest rates to boost the stock market in advance of their election campaign, it doesn't generally turn out that way.
And even when rates do fall, the incumbent party in the White House usually loses.
Since 1952, the first election year after the 1951 agreement between the Treasury and the Federal Reserve that lifted World War II restraints on the Fed, there were only four elections when rates fell either throughout the year or in the latter part of the year.
Republicans were the incumbents all four times, but falling rates weren't much help. They lost three of the four elections.
The Treasury bill rate rose in five of 11 election years. The rate was almost flat in one election year and fell (without rising later) in only two.
"If falling rates have been a nemesis to Republican incumbents, then rising interest rates have been a consistent Waterloo for Democratic incumbents," Mr. Boltz said in a report.
In the six election years in which Treasury bill rates either rose through the year or late in the year, the incumbent party won three times and lost three times. The three victories went to the Republicans, and the three defeats went to the Democrats.