Real estate investment trusts such as Federal Realty (NYSE: FRT) also perform well as rates fall. Source: Getty Images Some basic background on monetary policy The Fed is mandated by law to help manage the U.S. economy and maximize employment while controlling inflation. This is a tougher call, however defensive stocks like consumer staples stalwart Proctor and Gamble (NYSE: PG) generally perform best in a tightening cycle as investors anticipate a slowdown in the economy.
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