The Fed's operation this time is somewhat confusing. On the surface, it cut interest rates, but it abruptly created a drama of "rate cuts leading to market collapse". Originally, everyone thought that rate cuts were a good thing, but it caused a sharp drop in US stocks, and global markets suffered. The problem is that the attitude behind this rate cut is not the "relaxation" signal expected by the market at all. On the contrary, the Fed's posture is as hard as a stone, and its tone is as cold as ice. The whole process reveals a strong emotion of "I don't want to cut, but I have no choice." What happened?
[Event Summary]
The matter starts with the Federal Reserve's rate cut. On a certain day in 2024, the Federal Reserve announced a rate cut. In theory, a rate cut is meant to stimulate the economy and instill confidence in the market. However, the result of this rate cut left people stunned. U.S. stocks plummeted, and the global market was swept into a storm. Everyone couldn’t help but wonder, 'Isn’t a rate cut a good thing? Why did it cause such a big drop in the market instead?'
In fact, this rate cut has sown the seeds of 'tragedy' from the very beginning. It is not that the Federal Reserve willingly chose to cut rates; they were 'forced' by the market. The market had been pressuring the Federal Reserve to act quickly, with almost everyone betting on a rate cut, the probability as high as 97%. If the Federal Reserve didn’t act, it would be like declaring 'war' on the market. So they had no choice but to announce the rate cut, but the problem is that this 'forced' rate cut clearly won’t soften their attitude and stance.
From the Federal Reserve's policy statement to every word in the press conference, there was an underlying tone of 'I really don’t want to cut.' Chairman Powell even directly stated at the press conference, 'The situation today is quite urgent, but we believe this is the right decision.' This statement sounds like it emphasizes the necessity of the rate cut while also subtly acknowledging the difficulty and reluctance of this action.
Interestingly, there were no balancing measures during this rate cut process. In the past, when the Federal Reserve released 'hard information,' they would always provide the market with some reassurance, such as hinting that there might be more easing policies in the future. But this time, the Federal Reserve maintained a cold demeanor throughout, without a hint of easing signals. On the contrary, Powell repeatedly emphasized the Federal Reserve's policy stance and described future adjustments as 'cautious.' In other words, they have clearly stated that they will not easily continue to cut rates.
Hearing this, the market completely exploded. Investors originally expected a 'dovish rate cut,' meaning that after the cut, there would be more easing policies to support market development. But the reality is that this rate cut not only lacked signals of easing but instead released strong 'hawkish' messages. The market was already on edge, and with the Federal Reserve's attitude, it ultimately led to a plunge in U.S. stocks.
In fact, before the Federal Reserve announced the interest rate cut, the market's expectations had already piled up to a dangerous height. Many people were convinced that after the rate cut, U.S. stocks would soar, gold prices would spike, and even the global market would usher in a wave of good news. All these expectations turned into bubbles the moment the news was announced. The Federal Reserve's indifferent attitude was like a bucket of cold water thrown directly on the flames of the market's enthusiasm.
And all the consequences, of course, are not just the sharp decline of U.S. stocks. The Federal Reserve's attitude quickly transmitted to the global market, causing financial markets in Europe and Asia to also shake, leaving everyone frightened by this 'rate cut nightmare.' Even more critically, this panic could trigger a series of chain reactions, such as capital outflows and asset price declines.
Interestingly, amidst this storm, gold prices have also become a focal point. In the past few days, some predicted that gold prices would first test $2600 and then choose a direction. And it turned out that this prediction was correct. Gold prices experienced intense fluctuations in the short term; some investors seized the opportunity, but many others lost their direction in this market.
It is worth noting that after the Federal Reserve announced the rate cut, there was no arrangement for any officials to publicly speak for a while. This silence, to some extent, further generated unease in the market. By convention, Federal Reserve officials would come out to reassure the market after major policy adjustments, but this time, they chose to remain silent, seemingly because — there was nothing good to say. If they wanted to say something, they might only be able to offer 'falsehoods' to reassure everyone, but the Federal Reserve clearly did not want to do that.
Moreover, the market storm triggered by this rate cut is entirely due to the Federal Reserve's overly 'hawkish' attitude, while the market's psychological expectations were overly optimistic. The huge gap between the two is like a suddenly snapped rubber band, pulling the market's emotions to the brink of collapse.
What’s even more surprising is that the Federal Reserve's actions this time have completely broken the previous 'routine.' In the past, their consistent style was 'a slap on the face, followed by a sweet date,' controlling the market while providing investors with some benefits. But this time, they not only slapped the market, but they are even prepared to deliver a second and third slap. Every word from Powell feels like salt being poured on the market's wounds, showing no sign of easing.
Up to this point, the situation is clear: the Federal Reserve has cut rates, but its attitude and stance have caused the market to collapse. A rate cut should have been a positive signal, but this time it has become the fuse that ignited market panic. Throughout the process, the Federal Reserve seems completely indifferent to the market's reaction; this 'cold' attitude is what is most unexpected.
The Federal Reserve's 'divine operation' has not only stirred up a storm in the financial market but has also sparked a huge discussion online. The comments from netizens are varied, but it’s clear that everyone is filled with complaints and doubts about the Federal Reserve's rate cut this time.
Some netizens directly criticized, saying: 'This rate cut is just for show, right? Clearly trying to cool the market but ended up pouring a bucket of ice water, and now the market is practically catching a cold!' Others joked: 'Is the Federal Reserve playing a 'slap in the face' game? Cutting rates so firmly; why not just switch to raising rates next time to save everyone the guesswork?'
Some netizens also expressed their anger from the market's perspective: 'A rate cut is a tool for releasing pressure on the economy; now it feels just like a rate hike. How can the market not collapse? Has the Federal Reserve forgotten who their rate cuts are meant for?' Even more excited investors commented: 'I was still fantasizing about gold reaching $3000 yesterday, but now I’m trapped today. Federal Reserve, you owe me money!'
Some calmer netizens tried to analyze the Federal Reserve's attitude: 'What Powell is saying can be translated to mean, 'I cut rates, but don’t expect me to cut further.' With such a definitive statement, the market naturally exploded. The real question is, is he more afraid of the economy overheating, or is he afraid of inflation rising? He can't be afraid of both.'
Many people expressed dissatisfaction with the Federal Reserve officials' silence: 'Usually, they are quick to speak, but now that the market is on the verge of exploding, not a single person shows up. Is the Federal Reserve trying to be a 'cold-faced killer'?' Some even directly criticized: 'It seems they are not afraid of the market crying, but rather afraid of being scolded themselves. They know the market is not buying it but pretend not to see; it’s truly absurd.'
Some investors also expressed their helpless 'lament' about their situation: 'I was thinking of buying some U.S. stocks to take advantage of the rate cut yesterday, but today I’m directly trapped. Federal Reserve, you are just messing with us!' Others joked: 'The fluctuations in the gold market these days are simply like a roller coaster; my heart can hardly take it. The Federal Reserve can still play such tricks during a rate cut; it's truly unprecedented.'
Some have tried to defend the Federal Reserve: 'To be honest, the Federal Reserve is also in a tough spot. The market is pressing too hard; they had no choice but to cut rates, but then they were criticized for being hawkish. Powell probably has a headache; the key is that he still has to pretend to be 'calm,' while inside he might have already collapsed.'
However, most people are still worried about the consequences of this rate cut: 'The Federal Reserve has completely shattered market confidence this time, and the global market will probably be hurt as well. A rate cut should have been a good thing, but now it has turned into the beginning of a disaster; how can we play this game?' Others are even more pessimistic: 'Forget about U.S. stocks; the global market is now following the trend downwards, the Federal Reserve is giving the whole world a lesson — don’t have illusions about rate cuts.'
Others have questioned the Federal Reserve's attitude: 'If they want to cut rates, why do it so reluctantly? If they really don’t want to cut, then just don’t cut; they could directly raise rates. This current attitude makes any rate cut meaningless and only confuses the market more.'
After listening to various comments from netizens, it must be said that the Federal Reserve's actions this time are indeed 'incomprehensible.' From the initial attitude to the subsequent market reactions and the emotional fluctuations of investors, each step seems like a 'surprising' chain reaction. The plunge triggered by this rate cut is clearly not a short-term storm; the secondary disasters it brings may continue to ferment.
For the global market, this incident is undoubtedly a wake-up call. The Federal Reserve's policy influence is never limited to the United States; every action it takes will have far-reaching impacts on the global economy. This 'flip' in the rate cut also makes people realize that the market's expectations of the Federal Reserve may have become overly sensitive and fragile.
To say one more thing, a rate cut should have been a 'tonic' for the market, but this time it has become 'poison.' The mismatch between the Federal Reserve's attitude and the market's expectations directly led to this storm's occurrence. How to restore market confidence in the coming time may be a serious issue that Powell and his team need to think about.$BTC