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Nick Timiraos, the "Fed mouthpiece", said that the US unemployment rate rose from 3.96% in May to 4.05% in June. The data has risen by 0.22% since March (3.83%). From the Sam's rule, the 3-month average has risen by 0.42% from the 12-month low, which is getting closer to the 0.5% threshold. The connotation of the "Sam's rule" is that when the 3-month average of the unemployment rate is 0.5 percentage points higher than the 12-month low, the economy is in recession. Therefore, it can be foreseen that a rate cut may come soon.
Raising or lowering interest rates are both monetary policies of the central bank, and their purpose is to allow the economy to develop stably and to stabilize prices and the financial system through monetary policy.
When inflation or the market economy is overheated, the central bank will use the means of raising interest rates to make people keep their money in the bank and not invest heavily in the stock market, houses, etc., so as to curb inflation and achieve the purpose of price control. In addition to curbing inflation, avoiding continuous depreciation of the currency leading to too high prices of imported products, and when interest rates are too low, capital outflows will affect investors. These are all reasons why the central bank will raise interest rates.
On the contrary, when the market economy is in recession, in order to promote economic development, the central bank will use interest rate cuts to encourage people to spend their money on consumption and shopping. At the same time, it can also improve the competitiveness of exports. Therefore, it is usually used in situations of deflation, economic recession, etc.