How to view the upcoming interest rate cut in the United States in December?
The global monetary policy trend is undergoing significant changes, with many countries entering a low interest rate cycle, a phenomenon that is becoming increasingly evident worldwide.
Global interest rate cut trend: Recently, the Swedish central bank cut rates by 50 basis points for the first time in a decade, and the Bank of Canada has cut rates by 50 basis points for the second consecutive month, totaling 175 basis points cut within the year. The Swiss National Bank and the European Central Bank have also lowered rates to varying degrees. These actions indicate that major global economies are actively responding to changes in economic conditions by adjusting interest rates to stimulate economic growth.
Expectations for interest rate cuts in China and the United States: The market generally expects that both China and the United States may also join the ranks of interest rate cuts in the future. The Federal Reserve may cut rates by another 25 basis points in December and is expected to continue the rate cut cycle into 2025, with an anticipated 3 to 4 more cuts, bringing the benchmark rate down to around 3% to support economic growth.
Reasons for low interest rates: The low interest rate policy is driven by the bottleneck in economic growth in developed countries. Infrastructure projects in European countries are basically completed, and they cannot stimulate the economy through infrastructure repairs, while also missing out on the development dividends of the internet wave. Therefore, to stimulate domestic demand and economic growth, European countries have adopted a strategy of lowering interest rates.
Debt and interest rates: The surge in national sovereign debt is also an important factor driving the low interest rate policy. High interest rates increase the cost of national debt repayment, so to reduce repayment pressure, countries are choosing to lower interest rates.
Future trends: Historically, global interest rates have been on a declining trend. From the 10% fixed deposit interest rate 30 years ago to the current near 2%, this trend indicates that the wave of interest rate cuts among countries worldwide will continue in the future.
Impact on ordinary people: Against the backdrop of low interest rates, ordinary people need to consider how to prevent currency depreciation. Investing in other higher-yielding projects has become an option, such as the stock market, gold, and virtual currencies.
The world is entering a new low interest rate cycle, and this trend will have far-reaching impacts on the global economy and personal investment decisions.
