Recently, Wall Street analysts have started to discuss the Federal Reserve again. The renowned financial institution BCA Research published a report with a stunning prediction: the Federal Reserve may cut interest rates more than previously expected next year!
Why do I say this?
The main reasons are twofold: inflation is decreasing faster than expected, and economic growth is a bit sluggish.
We all know that the Federal Reserve has always regarded controlling inflation as one of its most important tasks. However, the inflation rate is now continuously declining. BCA's analysts believe that according to the current trend, next year's inflation rate may be lower than the Federal Reserve's target.
On the other hand, signs of weakness are also beginning to appear in the U.S. job market. Although the unemployment rate is not high, the number of new jobs is decreasing. This indicates that the momentum for U.S. economic growth is insufficient.
Faced with this situation, what will the Federal Reserve do?
BCA's analysts believe that the Federal Reserve is likely to choose to cut interest rates to stimulate the economy. Moreover, they think the extent of the cuts may exceed the Federal Reserve's own previous forecast of 50 basis points.
Why is there such a judgment?
Because the Federal Reserve's goal is to achieve a 'soft landing', controlling inflation while maintaining economic growth. If inflation decreases too quickly and economic growth is sluggish, the Federal Reserve will have to adopt more accommodative monetary policies to stimulate the economy.
So, when will the Federal Reserve start to cut interest rates?
BCA's analysts predict that the Federal Reserve may start cutting interest rates as early as March next year. If inflation continues to remain sluggish, the Federal Reserve may cumulatively cut rates by 100 basis points before the end of the year.
What impact will this have on us?
If the Federal Reserve really cuts interest rates significantly, it presents both opportunities and challenges for us.
The opportunity lies in the fact that lower interest rates will stimulate investment and consumption, which is beneficial for economic growth.
The challenge is that lower interest rates will also lead to rising asset prices, exacerbating asset bubbles.
In short, the Federal Reserve's policy adjustments may have far-reaching effects on the global economy. While we ordinary people cannot change the overall situation, we can prepare in advance, seize opportunities, and avoid risks.
Finally, I want to ask everyone a question: If the Federal Reserve really cuts interest rates significantly, what impact do you think it will have on the stock market, housing market, and so on?
(Note: This article represents only personal views and is for reference only)
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