After the European Central Bank announced the rate cut, the United States continued to be hawkish last month. There have been articles before that Europe cut interest rates. The worst result is that the Federal Reserve will be hawkish and reap Europe. When the Federal Reserve was hawkish, the European Central Bank was frightened and no longer arrogantly mentioned another rate cut. Putting pressure on Europe should be the Fed's last dance, and it can be regarded as the final battle of the Fed's current round of rate hikes. (Raising interest rates again and maintaining interest rates do not have much impact on the Asia-Pacific region. Europe has been relatively dry in recent years and is not worth the Fed's ruthless move)
As for rate cuts, from a historical perspective, the Fed's rate cuts usually occur 2 to 3 months before the official election (try to implement a neutral strategy before the official election to avoid affecting the election). Including the recent sharp drop in Biden's approval rating, it is helpful to raise the rate cut to before September. The neutral strategy of the economy can neutralize the election results to the greatest extent. If we still remember that Powell once said that the unemployment rate will be an important indicator for determining rate cuts, since the unemployment rate has risen for three consecutive months, if nothing unexpected happens, there will be news about rate cuts at the interest rate resolution on July 31 at the end of this month.
September is the month of interest rate decision and economic outlook. Usually, the market outlook after the interest rate cut will be considered before the economic outlook. The interest rate decision at the end of this month is still a very critical factor. Last month, the old man said that a 25 basis point interest rate cut will not have an impact on the long-term economy in a few years.
Compared with the market's expectation of a rate cut in September, I still bet on the probability of a 25 basis point interest rate decision at the end of this month.
