Market expectations for interest rate cuts are continuously rising. The news of rate cuts is about to break, tomorrow night and the early hours of Thursday at 2 AM, the Federal Reserve is basically set to cut rates by 25 basis points, the real focus will be on Powell's speech—will he hint at another rate cut this year, or even two?
If this step is realized, it means that a new round of rate cut cycle officially begins. But be aware that the results of rate cuts are not always unequivocally positive; the key is still to consider the economic environment at that time. Looking back at history: in 2001 and 2007, the tech bubble and the subprime mortgage crisis had already buried hidden dangers, and rate cuts did not reverse the decline; while in 1995, the economy was improving, and rate cuts became a booster; as for 2020, the pandemic hit the economy to the bottom, and the market only welcomed a significant surge after rate cuts combined with recovery.
Therefore, rate cuts themselves are just surface actions of monetary policy; what truly determines market trends is whether the underlying economic fundamentals are in a downward spiral or in a recovery stage.
#美联储降息预期升温
If this step is realized, it means that a new round of rate cut cycle officially begins. But be aware that the results of rate cuts are not always unequivocally positive; the key is still to consider the economic environment at that time. Looking back at history: in 2001 and 2007, the tech bubble and the subprime mortgage crisis had already buried hidden dangers, and rate cuts did not reverse the decline; while in 1995, the economy was improving, and rate cuts became a booster; as for 2020, the pandemic hit the economy to the bottom, and the market only welcomed a significant surge after rate cuts combined with recovery.
Therefore, rate cuts themselves are just surface actions of monetary policy; what truly determines market trends is whether the underlying economic fundamentals are in a downward spiral or in a recovery stage.
#美联储降息预期升温
