The US Federal Reserve will hold a meeting next week
The market expects to cut interest rates by a quarter. Many Wall Street tycoons also estimated that there will be at least two more interest cuts this year. Deutsche Bank even estimates that interest rates will be cut in the next four meetings. In fact, the US economic data has deteriorated significantly in the near future, and Fed Chairman Powell’s attitude toward interest rate cuts remains open. It is believed that in order to avoid the economic recession, the Fed will actively cut interest rates in the future and even have the opportunity to There is a zero interest rate.
US President Trump continued to attack the Federal Reserve on Wednesday, and this time it is even more advocating that the Fed should lower interest rates to zero
If his remarks are published in the beginning of the year or in the first quarter, the market may think that he thinks too beautiful, but in today’s political and economic situation in the United States, his request is not entirely impossible.
The data recently released by the United States is obviously eclipsed. Although the growth of private positions is better than expected, the overall job growth has been disappointing. Coupled with the contraction of the manufacturing index recorded last week, the US economy has been exhausted. Summers, the former US Treasury secretary and current professor at Harvard University, expects that the chance of recession next year will reach 50%.
Reflected in the trend of interest rate futures, it is seen that investors have expected that the federal funds rate will continue to fall from September and will fall to 1.2% by the end of this year. If the situation does not improve, the trade conflict between China and the United States will continue. The interest rate will fall to 0.75% in September next year. It is not necessarily impossible to see zero in the end of next year.
Although the United States is not the first to have zero interest rates, if it appears as scheduled next year, its significance will be very large, meaning that the US economy has been in the same place in the past decade
Although the financial tsunami has now been more than 11 years old, the US economy is still in a step-by-step manner. It cannot be compared with the pre-tsunami, and interest rates and historical levels are getting lower and lower. The rate hike cycle starts from the end of 2015 and last year. It stopped in December. Interest rates have not been normalized for a long time and have been limited to low levels. Moreover, the zero interest rate has a greater impact, that is, the funds continue to pursue high-risk assets in order to obtain higher returns, which is a great asset for the current price is still near historical highs, especially the stock market and the property market. The hidden danger will make the crisis of bubble bursting even bigger.