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It's so ruthless! After the US dollar cut interest rates, the People's Bank of China made three moves in a row, all of which stunned the Fed

It's so ruthless! After the US dollar cut interest rates, the People's Bank of China made three moves in a row, all of which stunned the Fed

The Federal Reserve cut interest rates, and the People's Bank of China's "Tai Chi pusher": a financial game without gunpowder

Lao Wang, a small businessman in Beijing, recently met people and said: "This United States cut interest rates, why don't we follow suit?" My small business loan is under a lot of pressure! Lao Wang's doubts represent the thoughts of many ordinary people. The US dollar interest rate cut, like a pebble thrown into the pond of global finance, ripples, but the People's Bank of China does not move, what is the mystery behind this?

1. Undercurrents: The beginning and end of the financial confrontation between China and the United States

The story begins with the Fed's "surprise attack". The 50 basis point rate cut seems to be aimed at stimulating the United States economy, but in fact it is a hidden murderous opportunity. With the depreciation of the US dollar, international capital will be like a shark seeking profits, flocking to markets with higher returns. This means the risk of capital outflows for other countries, especially China, and may even trigger financial turmoil.

It's so ruthless! After the US dollar cut interest rates, the People's Bank of China made three moves in a row, all of which stunned the Fed

China's central bank is certainly not going to sit still. On September 23, the central bank introduced the "reverse repo" method to inject liquidity into the market and reduce the 14-day reverse repo rate. This is like timely rain, which relieves the "thirst" of market funds. Then, on September 24, the central bank played another set of "combination punches": cutting the reserve requirement, lowering the mortgage interest rate, and reducing the down payment ratio for second homes. This series of operations not only stabilized the market, but also stimulated domestic demand, which can be described as killing two birds with one stone.

2. Peeling back the cocoon: the deep meaning behind the central bank's "slow motion".

Why didn't China's central bank follow the Fed in cutting interest rates? Is it really "unresponsive"? Of course not! This is a reflection of the wisdom and foresight of the People's Bank of China.

China's economy is in a critical period of recovery, and a premature interest rate cut could trigger capital outflows, which is not conducive to long-term economic stability. Blindly following the Fed to cut interest rates will weaken the independence of China's monetary policy and make China's economy constrained.

It's so ruthless! After the US dollar cut interest rates, the People's Bank of China made three moves in a row, all of which stunned the Fed

The central bank chose "precise drip irrigation" and continued to inject funds into the market through reverse repos and treasury bond purchases to ensure sufficient market liquidity. This approach avoids the risk of inflation caused by "flooding" and more effectively supports the development of the real economy.

3. Seeing the sun: The future economic trend is closely related to you and me

The "Tai Chi pusher" of the People's Bank of China seems to be a static brake, but in fact it is a late strike. It not only effectively coped with the Fed's "financial offensive", but also provided a solid guarantee for the stable development of China's economy.

It's so ruthless! After the US dollar cut interest rates, the People's Bank of China made three moves in a row, all of which stunned the Fed

Wang's small business can also benefit from the central bank's policies. Reducing the mortgage interest rate and the down payment for a second home has reduced the pressure on ordinary families like Lao Wang to buy a house. The central bank's support policies for small and medium-sized enterprises also provide more development opportunities for small and micro enterprises like Lao Wang.

Who is the ultimate winner in this financial game without gunpowder? It is the countries and the people that can remain calm and prudent. The PBOC's precise regulation and control has not only maintained financial stability, but also laid the foundation for the long-term healthy development of China's economy.

The People's Bank of China (PBOC) will continue to maintain a prudent monetary policy and respond flexibly to external challenges to ensure the continued prosperity of China's economy. We have reason to believe that under the correct leadership of the central bank, China's economy will have a better tomorrow!

It's so ruthless! After the US dollar cut interest rates, the People's Bank of China made three moves in a row, all of which stunned the Fed

Do you think the PBOC's response is effective? Feel free to leave a message in the comment area and share your views!

Some additional thoughts:

What is the impact of the Fed's rate cut on the global economy?

It's so ruthless! After the US dollar cut interest rates, the People's Bank of China made three moves in a row, all of which stunned the Fed

How is China responding to changes in the international financial situation?

How do central bank policies affect the lives of ordinary people?

This article tries to interpret the incident in a more colloquial and close-to-online review style, and adds some questions in the hope that it will provoke readers to think and discuss. You can also add more data and cases according to the actual situation to make the article more convincing.

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