While everyone was enjoying the leisurely holidays, suddenly a piece of news came that the Federal Reserve boss Powell said they were not in a hurry to cut interest rates.

Now, those who were expecting to save some money to buy a house, a car, or even invest in the stock market have suddenly been poured a bucket of cold water by this news! So why did the Fed do this?

1. Why the Fed doesn’t cut interest rates

As soon as the news came out, the global financial market reacted quickly and violently. The stock market and gold fell together, as if everyone suddenly lost their sense of direction and ran around looking for a safe haven.

Powell's move not only disappointed those who hoped to stimulate the economy by lowering interest rates, but also frustrated investors who expected to benefit from low interest rates.

So you see, this is the financial market, and one sentence can cause global capital liquidity to fluctuate greatly.

And why does the Fed do this?

The reason is that the current economic situation in the United States is relatively stable, but if you look at other countries, the economic fluctuations in Europe and Asia are much greater than we imagined.

The Fed may be thinking, since the US is doing fine now, why should we rush to use the "big move" of lowering interest rates? Maybe they are waiting to see how the global economy will develop before deciding whether they really need to lower interest rates to stimulate the economy.

It's like playing a big strategy game, where every step must be carefully considered, because if you make a wrong move, it could be a disaster.

Powell and his team are clearly playing a long game. They are not just concerned about the United States, they are also ensuring the balance of the global economy.

Therefore, not lowering interest rates this time may just be a backup plan they leave for themselves to prepare for possible storms in the future.

So what does this mean for us? In simple terms, it means that if you are an investor or someone who is working in the market, you have to be more vigilant and not just believe everything you hear.

And don’t forget that the market is always changing, and today’s decisions may be outdated tomorrow. So the key is to stay flexible and be ready to respond to market changes at any time.

Second, the global market response

When the Federal Reserve announced that it would not cut interest rates that day, the world was shocked. Investors turned pale! The atmosphere of the entire market can be described in three words: cold, quiet, and miserable!

The reaction of European and American stock markets was particularly dramatic. These markets were originally excited by low interest rates, like drinking Red Bull, but suddenly the expectation of interest rate cuts disappeared. It was like a bird that suddenly lost its wings and fell heavily.

Investors' confidence was like being poured with a bucket of cold water, their confidence was dampened, and market volatility intensified.

The reaction of the gold market was equally dramatic. Gold is usually seen as a safe haven, and once there is any sign of trouble, people will rush to buy gold.

But this time when the Fed said it would not cut interest rates, the price of gold fell like a landslide. Why?

Without the rate cuts, the dollar has become stronger, and gold has naturally fallen out of favor. It's like suddenly finding out that the celebrity you like is actually a controversial figure, and the enthusiasm cools instantly.

But when it comes to A-shares, the situation here is a little different. Because the A-share market was closed during the long holiday, it was not directly impacted.

But don't be happy too soon. Once the holiday is over and the door opens, the A-share market will have to face the real test after the holiday. At that time, the market's reaction will be like a belated flood, and will be just as fierce.

This series of reactions shows how sensitive the financial market is, and also gives us ordinary people a vivid economics lesson.

3. The motivation behind the Fed’s policy

Is there any other underlying reason why the Fed decided not to cut interest rates? Some say it is to maintain the strong position of the US dollar and ensure that the US dollar exists like a superhero in the global financial market.

Others see it as a move to allow for more room for maneuver in the future.

First, let's look at how the Fed's decision affects the global economy. If the Fed cuts interest rates, generally speaking, the US dollar will weaken, and other countries' currencies will appear relatively strong.

If the interest rate is not cut this time, the US dollar will remain strong as before, which will be a big blow to other currencies, especially those of emerging market countries, whose currencies may be like a boat blown by the wind and may capsize at any time.

Now the Federal Reserve may be playing a balancing game in the global economy with a "hold steady, I'll do it" attitude.

They may feel that the current US economy is still okay and does not need further stimulus through interest rate cuts. This strategy not only keeps the US economy stable, but also ensures the attractiveness of US dollar assets.

After all, in this global economic environment full of uncertainty, a strong dollar is like a beacon, providing direction for global funds.

But the risks are also obvious. The strength of the US dollar is a challenge for other currencies around the world, especially for countries that rely on exports, whose products may not be so competitive in the international market.

In addition, the risk of capital outflow in emerging market countries is increasing, which may trigger a series of financial crises.

Behind the Fed's seemingly calm strategy is actually a large-scale game, and every country must take countermeasures to protect itself from being affected too much.

4. The unique performance of China’s A-shares

During the long holiday, when the global financial market was in turmoil due to the news that the Federal Reserve would not cut interest rates, the Chinese A-share market was suspended due to the holiday.

But don’t be happy too soon. The moment the market opens after the holiday, all eyes will be focused on the A-shares. Everyone is waiting to see whether this market, which has avoided the limelight during the holidays, will be hit hard by external fluctuations after its return.

Indeed, the A-share market has its special advantages. The closure during the long holidays means that it has temporarily avoided the first wave of impact.

But it's like the first day back at work after the holidays, and your desk is already piled with unprocessed documents, waiting for you to deal with them one by one.

The unstable factors in the global market have not disappeared because of the A-share holiday. They are like waves ready to hit hard as soon as the market opens.

But we should not be too pessimistic. China's domestic economy is relatively stable, which provides a solid backing for the A-share market.

Even though volatility in global markets may bring some pressure to A-shares, this may also be an opportunity to test and demonstrate the resilience of the domestic economy.

Investors may pay more attention to domestic policy orientation and economic fundamentals, and these factors may help the A-share market withstand external storms and even find opportunities for a rebound amid market fluctuations.

Faced with such a situation, domestic investors need not only calmness, but also a deep understanding and correct prediction of market fluctuations.

The A-share market after the holiday will be a test, not only testing the market's own ability to withstand pressure, but also testing investors' response strategies.

When the global economic environment is full of uncertainties, this ability will become an important asset for Chinese investors.