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The monetary policy decision-making in the United States is particularly complex in the current environment and is affected by a combination of multiple factors. Against the backdrop of a stable economy and mild inflation, the following points have become the main considerations:
Sino-US relations: The two parties have reached a consensus on dealing with China issues, and the financial field has become an important area of game between the two sides, which has a profound impact on monetary policy formulation. Treasury bonds and finance: The economy supported by bond issuance has remained strong in the past two years. However, in order to ease debt costs and market pressures, lowering interest rates has become a necessary means, but this is particularly difficult in the context of Sino-US relations. Inflation and growth: Given the current situation of weak inflation and solid economic growth, monetary policy needs to consider other factors more when making decisions. However, if inflation rises or growth slows in the future, these factors will become more important.
Regarding interest rate cuts, the market may have concerns about an economic downturn, but as long as there are no obvious signs of recession, the market should be able to recover quickly. Historical experience tells us that after the short-term market volatility caused by interest rate cuts, the market will return to stability.
The hawkish interest rate cut by the European Central Bank in June may bring challenges to the Fed's monetary policy operations, requiring it to carefully manage market expectations while cutting interest rates. The market needs to adapt to this new environment and understand that rate cuts may only be limited.
Although the Fed is relatively independent, its close ties with the White House also affect its policy decisions to a certain extent. Adjustments in economic data may imply policy intentions, but the market can usually only judge based on public data. $BTC
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