At present, the CME swap rate shows that the probability of a 50 basis point rate cut in September has increased to 63%, while the probability of a 25 basis point rate cut is 37%.
Today, many media and professionals have expressed that a 25 basis point rate cut may be more risky. The core reason is that they feel that a 25 basis point rate cut cannot effectively stimulate economic progress. I am afraid that the economy will weaken rapidly or even decline after the rate cut.
Indeed, after the September rate cut, the next rate cut will have to wait until November. If there is any variable during the period, unless an emergency interest rate meeting is held, once this happens, the market will directly turn to a trading recession.
At present, the probability of a 50 basis point rate cut is constantly being pushed up, and the Federal Reserve is also in a silent period. I don’t know if this is in line with the Federal Reserve’s established plan. If it is in line with the plan, will the first rate cut really be 50 basis points?
Regarding the 50 basis point rate cut, my view is still the same as before. This is a strong medicine that will stimulate economic growth, but it also has the same disadvantages, and the probability of even triggering a market trading recession is not low.
But the difference is that if the first interest rate cut is 50 basis points, it will be a good thing for many capitals.
Although the probability of a 50 basis point interest rate cut has been pushed up, facing the upcoming interest rate meeting, as long as the data is not certain, the market will not buy it and continue to maintain a cautious attitude.
