On the roller coaster of the economy, rate cuts are like a gust of wind that makes us sway. Every turn may change the future direction. This time, the Federal Reserve may cut interest rates by another 25 basis points in December. This is big news, and everyone needs to think about it carefully.
Powell's recent statement is really worth paying attention to
Powell is the head of the Federal Reserve, and his words affect the entire economy. In recent public appearances, his stern expression can be said to be "I am the president, and I have the final say", but if you compare it with his previous tough tone, you will find that this time his tone seems to be a little loose.
Tough attitude and current changes
In the past few months, Powell has been emphasizing the need to control inflation, which probably scared many investors. His warnings made people nervous, fearing that the economy would go wrong if they were not careful. But this time, he even hinted at a possible rate cut, and mentioned the slowdown in economic growth. Is this a change of strategy, or is there another plan?
Inflation and external debt pressures
Of course, inflation is still a big concern for him. Prices are rising rapidly, and ordinary people's wallets are empty. And the continuous increase in foreign debt makes the US economic situation look more fragile. In this case, whether interest rate cuts can solve the problem is a big question mark.
Observation of the interest rate cut cycle
Speaking of interest rate cuts, we also have to look at the interest rate cut situation this year.
A major change in direction is unlikely in the short term
Judging from the current economic data, the Fed does not intend to change the pace of interest rate cuts easily. If you think about it, cutting interest rates in a hurry may cause the economy to overheat, but if it is cut too quickly, the recovering market will suffer.
A model of gradual rate cuts
In this case, a gradual rate cut may be more reliable. Faced with market uncertainty, policymakers are taking a gentle approach, taking their time, and letting the market adapt to these changes. After all, no one wants to see a sudden thunderstorm.
The game of alternating old and new policies
There is actually a policy game behind the interest rate cut.
The impact of tariffs
In recent years, the US trade policy has been like a dancer on the edge of a knife, sometimes dancing gracefully, and sometimes trampling the economy to pieces. The tariff policy has caused the prices of imported goods to rise sharply, and has also directly shrunk the profit margins of enterprises. In this environment, whether the interest rate cut can bring real growth is like a guessing game.
Possibility of international counterattack
In addition to the impact of domestic policies, the international situation is also very striking. If other countries also cut interest rates or implement stimulus measures, the economic prospects of the United States will be less certain.
Market reaction
Next, we'll have to see how the market reacts to these developments.
Poor performance of industrial data
The industrial data for the first ten months of this year is really hard to describe, with both production and consumption appearing quite weak. Faced with such a situation, investors are naturally uneasy and their expectations for a rate cut are becoming more urgent.
The difficult dilemma of negative impact and positive expectations
At this time, the market is facing a double attack of "bad news" and "good news expectations". If the interest rate cut is implemented, the whole market will be injected with a shot of adrenaline and come alive; but if the result is not as expected, the majority of investors may be disappointed and feel very frustrated.
Observation on the RMB exchange rate
Finally, we have to turn our attention to another corner of the global economy that cannot be ignored - the RMB exchange rate.
Short-term volatility concerns
The recent fluctuations in the RMB exchange rate have made many people uneasy. With the Fed's expected interest rate cuts, if the RMB continues to depreciate, our economy will face more challenges. Whether to follow the market or passively follow the trend, we must always be vigilant.
In short, the Fed may cut interest rates by another 25 basis points in December. This is not only related to the US economy, but also a mirror of the global economy. While enjoying the financial game, we must also be alert and pay attention to the changes in the market.
So, what do you think the impact of this rate cut will be on the market? Welcome to share your views in the comment section!
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