In recent years, the global economic landscape has been changing rapidly, and the central bank's monetary policy has been constantly adjusted, especially the Federal Reserve's recent one-time interest rate cut of 50 basis points, which marks that the world has officially entered a cycle of interest rate cuts.
What impact has this policy change had on the world? What does the appreciation of the RMB mean in this context? And how will it change the lives of ordinary people?
Fed presses global rate cut button
In 2024, the Federal Reserve's one-time interest rate cut of 50 basis points set off a wave of interest rate cuts around the world. Behind this move are the actions taken by major economies around the world to respond to economic slowdown and stimulate demand.
As one of the most influential central banks in the world, every move of the Federal Reserve will trigger a chain reaction around the world. This substantial interest rate cut is not only to cope with the decline in domestic inflationary pressure in the United States, but also to stimulate global economic recovery.
The Fed's decision to cut interest rates quickly led to policy adjustments by other central banks. Western developed countries such as the European Central Bank, the Bank of England, the Swiss National Bank, and the Bank of Canada followed suit and cut interest rates.
For example, the Bank of England decided to cut its benchmark interest rate by 25 basis points to address weak domestic consumer demand. At the same time, Asian countries are not far behind, with emerging economies such as the Philippines and Indonesia announcing rate cuts, and the Bank of Thailand also saying it is planning to cut rates.
In addition to these developed countries and emerging markets, the Gulf countries followed closely. my country's Hong Kong Monetary Authority, the Central Bank of Kuwait, the Central Bank of the United Arab Emirates, the Central Bank of Qatar, etc. also quickly adjusted interest rates to ensure the stability of their domestic markets. Under the collective action of central banks around the world, 2024 has become a key turning point in the global interest rate cut trend.
There are multiple considerations behind the Federal Reserve's drastic interest rate cut. The global economy has been in a state of weak recovery since the outbreak of the epidemic in 2020.
Although some economies have achieved a short-term rebound after the epidemic, global supply chain problems, turbulent international situation and continued inflationary pressure make the long-term economic growth outlook not optimistic.
The Fed's intention of cutting interest rates is obviously to stimulate market demand by reducing financing costs, thereby promoting domestic economic growth in the United States. The Fed's interest rate cut will not only affect the domestic US market.
As the world's reserve currency, changes in the US dollar's interest rate have a direct impact on global capital flows. In the past few rounds of US dollar interest rate hikes, a large amount of capital has flowed into the US market, and other countries have been forced to follow suit to prevent a sharp depreciation of their currencies and capital flight.
Sri Lanka is a typical example, which was unable to withstand the pressure of capital outflow and eventually fell into a serious economic crisis. Therefore, the Fed's interest rate cut also provided a respite for other economies.
By cutting interest rates, countries can reduce the economic burden on their people, release market demand and promote economic recovery. It can be said that the Fed's interest rate cut has pressed the "button" for global interest rate cuts, triggering a policy synergy effect on a global scale.
RMB: Unique path of interest rate cuts and appreciation
RMB interest rate cut in 2024: 2-3 interest rate cuts, the interest rate level is already at a low level. In line with the global interest rate cut trend, my country also carried out multiple interest rate cuts in 2024.
According to statistics, the RMB has cut interest rates 2 to 3 times in 2024, with a cumulative reduction of 20 to 45 basis points. The mortgage rate has dropped to 2.89%, while the interest rates of some consumer loan products are even as low as 1.88%. This series of interest rate cuts is aimed at reducing residents' loan burden, increasing market liquidity, and boosting domestic consumption and investment.
Unlike other countries, my country's interest rate cuts are highly forward-looking. Long before the Fed announced the rate cut, my country had already begun to gradually lower interest rates to ensure that the domestic economy can remain stable amid changes in global monetary policy.
my country has a huge domestic demand market and a complete industrial chain, which has attracted a large amount of international investment. In addition, my country has implemented strict foreign exchange controls, so the risk of capital outflow is relatively small.
As central banks around the world cut interest rates, the changes in the RMB exchange rate against the US dollar have also attracted widespread attention. In 2024, the RMB exchange rate against the US dollar rose to 7.04, showing a certain degree of appreciation. Along with the Fed's interest rate cut, the US dollar index weakened, which provided conditions for the appreciation of the RMB.
The direct benefits of RMB appreciation are obvious.
First, appreciation will attract more international investors to enter the Chinese market. The CEO of a well-known British hedge fund predicted that if the US dollar continues to cut interest rates, the RMB will likely appreciate by 10% and is expected to attract up to $1 trillion in capital to flow into the Chinese market.
The return of foreign capital will not only improve my country's capital market, but also stimulate domestic economic growth and increase employment levels.
Second, the appreciation of the RMB means that my country's position in international trade is also gradually improving. According to data from SWIFT (Society for Worldwide Interbank Financial Telecommunication), the RMB has been ranked the world's fourth largest payment currency for nine consecutive months, and its market share in international trade settlement has risen to 4.74%.
This not only further expands the influence of the RMB in global trade, but also brings more competitive advantages to my country's foreign trade enterprises.
The impact of RMB appreciation on the domestic economy
The appreciation of the RMB is not just a change in the exchange rate figures, it has a profound impact on my country's economic structure. The appreciation of the RMB will reduce the prices of imported goods, especially the import costs of raw materials and consumer goods.
This is good news for domestic companies, as they can obtain the required production factors at a lower cost, thereby enhancing the international competitiveness of their products.
At the same time, the appreciation of the RMB will make overseas travel, shopping and other activities cheaper for ordinary people, further increasing the purchasing power of the RMB.
On the other hand, the increase in foreign capital inflows will improve the domestic investment environment. The influx of a large amount of foreign capital means that my country's capital market will be further expanded, corporate financing costs will be reduced, and investment opportunities will increase.
This will not only help stimulate domestic economic growth, but will also drive employment and improve residents' income levels. According to forecasts, with the continued appreciation of the RMB in the future, my country's business environment will further improve and attract more international investors.
For ordinary people, the appreciation of the RMB and the decline in interest rates bring many benefits.
First, the decline in interest rates has directly reduced residents’ loan pressure. The mortgage interest rate has dropped to 2.89%, which has greatly reduced the loan repayment burden of home buyers.
The interest rate of consumer loans has been reduced to 1.88%, further reducing residents' financing costs and encouraging consumption. This series of favorable policies will help boost the domestic consumer market and promote the internal circulation of the economy.
Second, the appreciation of the RMB means lower costs for overseas consumption. For consumers who like to travel or shop abroad, the increased purchasing power of the RMB will enable them to buy foreign goods at lower prices.
At the same time, the cost of importing raw materials for enterprises will also be reduced, which will help control domestic price levels, curb inflationary pressure, and further improve the quality of life of residents.
Third, with the influx of foreign capital, the activity of the domestic capital market will be further enhanced. The influx of large amounts of funds will not only drive up the stock market, but also drive up the prices of assets such as real estate.
For residents who hold assets, this is an opportunity to increase their wealth. Ordinary investors also need to remain rational and avoid blindly following the trend of investing in foreign markets, especially in the current international environment with high uncertainty.
In summary, the global interest rate cut wave has arrived, and the Fed's interest rate cut has triggered a chain reaction among central banks around the world. The appreciation of the RMB in this context indicates that my country's position in the global economic landscape has been further enhanced. As the international status of the RMB continues to increase, my country's economic prospects are becoming brighter.
For ordinary people, this historic turning point has brought improved quality of life, reduced economic pressure, and more investment opportunities.
The appreciation of the RMB is not just a monetary phenomenon, it reflects the steady development of my country's economy and the favor of global capital to my country's market. In the days to come, ordinary people should seize this opportunity, follow the trend of economic development, and welcome a better life.
Behind this wave of global interest rate cuts is the self-adjustment and adaptation of economies in various countries in a complex international environment, and my country's response measures are clearly at the forefront. With the appreciation of the RMB and the return of foreign capital, my country's economy will usher in a new wave of growth. #DODO助力Meme发行 #DODO助力Meme发行 #加密市场反弹 #币安上线CATI #鄂B炒家
