The current monetary policy decisions of the United States are affected by many factors, including the following aspects:
1. Sino-US relations: On the issue of confronting China, the two parties in the United States have basically reached an agreement, and the financial game has become one of the main battlefields, which has a significant impact on policy.
2. National debt and fiscal conditions: In the past two years, fiscal policy has maintained strong economic growth through bond issuance. However, the interest costs and market impact of debt need to be mitigated by lowering interest rates, although this goal is difficult to achieve in the short term due to the impact of Sino-US relations.
3. Inflation and economic growth: At present, inflation is low and economic growth is acceptable, which makes monetary policy consider more other factors. The importance of these factors will increase if inflation spirals out of control or growth slows in the future.
In addition, with regard to interest rate cuts, the market may be worried about economic problems, but as long as there is no substantial recession, the market should be able to recover quickly. Historical examples show that markets can return to stability after short-term panic about interest rate cuts.
The European Central Bank's hawkish rate cut in June may affect the Fed's operations, causing it to cut rates while also trying to manage market expectations. The market needs to adapt to an environment where even if interest rates are cut, it may only be limited.
Although the Fed is relatively independent, its close ties to the White House can influence its policy decisions. Adjustments in economic data may hide policy intentions, but the market can usually only rely on published data for analysis and reaction.
