Recently, many people have been paying attention to interest rate cuts, but many people still don't quite understand why interest rate cuts are good for the market. Here are a few key reasons:
1. Increased liquidity: Interest rate cuts mean lower borrowing costs, which usually increases liquidity in the market, thereby promoting consumption and investment.
2. Investment shift: Interest rate cuts usually reduce the yields of fixed-income investments (such as bonds), and many investors will shift their funds to other markets with higher yields.
3. Inflation expectations: Interest rate cuts may trigger inflation expectations because more money flows into the market and demand for goods and services increases. If the market expects inflation to rise, investors may buy assets to hedge against inflation, which may also drive the market up.
