The Federal Reserve's monetary policy meeting was held on the 17th and 18th local time.
According to foreign media reports, the current focus of the market is whether to cut interest rates by 25 basis points or 50 basis points. From March 2022 to July 2023, the Fed raised interest rates 11 times in a row, with a cumulative increase of 525 basis points. Over the past year, the Fed has maintained its target range for the federal funds rate at between 5.25% and 5.5%, the highest level in 23 years.
The Federal Reserve's monetary policy meeting will make the latest judgment on the trend of interest rates in light of the current economic situation in United States.
Previously, Fed Chairman Jerome Powell had said in late August that the time had come to cut interest rates, almost "explicitly" that the Fed would announce a rate cut at its September monetary policy meeting. However, data released last week showed that United States core CPI rose 3.2% year-on-year in August, exceeding market expectations and cooling market expectations for a sharp Fed rate cut.
At present, the market is widely expected to start the Fed cut interest rates for the first time since March 2020 this week, thus kicking off the rate cut cycle. However, there are different views on whether to cut interest rates by 25 basis points or 50 basis points.
Tao Chuan, chief economist of Minsheng Securities: After the release of the United States non-farm payrolls data for August a few days ago, Fed officials did not have a clear preference for the magnitude of the first interest rate cut. The slowdown in economic growth is not enough to trigger a half-percentage point rate cut, but the Fed has not ruled out more aggressive rate cuts in the future. Therefore, in addition to the magnitude of interest rate cuts, the interest rate decision at this meeting and the Fed's judgment on the economic situation at the press conference are also a major focus of the market.
Affected by the expectation of the Federal Reserve's interest rate cut, the international financial market is highly volatile
For the Federal Reserve's interest rate meeting, the global financial market has reacted in advance, and many markets have increased volatility.
In the past week, the international gold price has soared again. Since September 12, the London gold spot gold price has risen for three consecutive trading days, hitting an intraday high of $2,589.68 per ounce on September 16, a record high. The main December contract of gold futures on the New York Stock Exchange also broke through the $2,600 per ounce mark on September 13, a new high since its listing.
At the same time, the United States stock market is also a strong counteroffensive, with the S&P 500 and Nasdaq Composite recording their biggest weekly gains this year, rising 4% and 6% respectively.
In the foreign exchange market, the USDJPY exchange rate fell below the key psychological level of 140 on Monday, hitting its lowest level in nearly nine months.
Analysts pointed out that the Fed's interest rate cut cycle is about to begin, and the real interest rate of U.S. bonds and the low level of the U.S. dollar are the core factors that promote the recent rise in international gold prices. The euro strengthened against the dollar after the European Central Bank decided to cut interest rates last week, which hit the dollar index, and gold prices soared as data showed that the United States economy slowed and increased expectations for the Fed to cut interest rates.
Tao Chuan, Chief Economist of Minsheng Securities: The market is becoming very emotional, and the current United States stocks and bonds are much more sensitive to economic indicators than in the past, and any unexpected weakening of United States economic indicators will exacerbate the market's concerns about a United States recession, which in turn will increase the volatility of financial markets.
Affected by the expectation of interest rate cuts, the monetary policies of many countries around the world have shifted
It is not only the financial market that is affected by the Fed's interest rate cut expectations, but many countries have also begun to adjust their monetary policies to cope with the impact of the Fed's interest rate cut on financial and economic and trade activities. Experts said that at present, there have been changes in the monetary policies of major international economies.
Central banks in a number of advanced economies have begun to shift their monetary policies: the European Central Bank (ECB) announced on September 12 that it would cut interest rates by 25 basis points for the second time this year; On September 4, the Bank of Canada began to cut interest rates for the third time in a row; Previously, the Bank of United Kingdom and the Bank of New Zealand had implemented the first interest rate cut in the current cycle in August. The only exception is Japan, which Japan the central bank has raised interest rates twice this year in hopes of normalizing monetary policy due to rising inflation.
Wang Qing, Chief Macro Analyst of Oriental Jincheng: As the monetary policies of the world's major central banks, including the Federal Reserve, have shifted, the global economy will switch from the anti-inflation mode of the past two years to a new equilibrium state in which inflation and growth are relatively balanced. The pace of global economic recovery is likely to accelerate in the future.
Experts said that as the Federal Reserve starts the interest rate cut cycle, the global financial environment will turn loose, the financing costs of enterprises and individuals will fall, and the global economic growth is expected to strengthen, but there are still many uncertainties affecting economic growth in the future.
Wen Bin, Chief Economist of China Minsheng Bank: These divergences have affected the predictability and stability of the Fed's monetary policy to a certain extent, especially in the context of frequent data revisions, and the uncertainty of decision-making has further increased, which may trigger an overreaction in the market, causing investor confidence to shake and triggering volatility in the financial market. The "expectation management" that the Fed has been advocating will also be challenged as a result. In addition, if the Fed's judgment of the economic situation is skewed, it may lead to lagging or excessive policy action, which in turn will increase the risk of economic volatility.
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