"Emergency 50BP Rate Cut in October?"

In the past two days,there has been a sudden buzz that the Federal Reserve is likely to urgently cut interest rates by 50 basis points in October.Is this possible?Why are they in such a hurry?

The Federal Reserve never expected that after the interest rate cut on September 19th,it would immediately fall into a passive position.It seemed as if the world had suddenly found the key to deal with the US dollar interest rate cut,with the key being the tacit cooperation between China and Europe,which panicked the Americans.Fortunately,the Japanese yen helped to hold the back.

Some experts believe that the interest rate cut in September was not originally the intention of the Federal Reserve.The high-level officials,led by Powell,have been saying that the United States does not have an economic recession,and inflation could rebound at any time.

However,two things disrupted the rhythm of the US dollar interest rate cut.

First,the federal government led by the Democratic Party suddenly reduced the non-farm employment figures for the past year by 818,000 people in late August.This shows that the US labor market is not as good as previously stated.The Biden administration would rather slap its own face than force the Federal Reserve to cut interest rates.

Second,the internal struggle in the United States.The interest rate cut results in September show that the forces opposing the cut have failed.

Once the US dollar interest rate cut begins,it is difficult to reverse.Because Wall Street,American banks,multinational companies,and all capital forces,the huge scale of US capital,are all prepared for the interest rate cut.The whole country is using its strength to cut interest rates.At this time,who dares to go against it?

Before the US dollar cut interest rates,everyone could argue.Once the decision to cut interest rates is made,it is like tens of thousands of people starting a marathon,and the starting gun has been fired.Can you brake at this time?Can you go backward?

Therefore,the Federal Reserve can control the pace of interest rate cuts and can do expectation management,but the overall trend of interest rate cuts has become irreversible.

On September 19th,at the interest rate meeting press conference,Federal Reserve Chairman Powell implied that the pace of interest rate cuts is under control,and it is also possible to pause the interest rate cuts.They are still as usual,with a look of wisdom and control.The Federal Reserve originally thought that if the US dollar cut interest rates,central banks around the world would have to follow suit.Everyone has been holding back for too long,and the economy urgently needs a monetary stimulus.

If everyone follows suit with rate cuts,then the US dollar interest rates would still be relatively high,the interest rate differential would still exist,the US dollar wouldn't depreciate too quickly,capital wouldn't flee too rapidly,and the US economy could achieve a soft landing.

However,this time the opponents have changed their tactics,and the various forces within the United States are not quiet either.

On September 19th,after the Federal Reserve cut interest rates,the Bank of England followed by announcing that it would not cut rates.On September 20th,the Bank of Japan also announced that it would stand pat.

The most important development was China's sudden move!Without any hesitation,without delaying time,without observing the situation,it acted in the first instance,very decisively,obviously a plan that had been prepared in advance.

On September 20th,the People's Bank of China first announced that the Loan Prime Rate (LPR) would remain unchanged.On September 24th,it followed up with a strong stimulus policy,targeting the two major reservoirs of the stock market and real estate.The stock market opened the floodgates to receive water,while also sending signals to stabilize real estate.

In the following days,first-tier cities significantly adjusted real estate policies,with Guangzhou completely lifting purchase restrictions,and Beijing,Shanghai,and Shenzhen closely following with relaxed restrictions.

The LPR remained unchanged,narrowing the interest rate differential with the US dollar,stabilizing the basic situation,while at the same time opening the intake valves for the two major reservoirs of the stock market and real estate.The direction of China's capital market changed dramatically,and US dollar capital was involuntarily attracted,flowing massively towards China.

Japan was also dragged down.Originally,the yen was depreciating again to support the US rate cut,but it couldn't withstand the involuntary outflow of capital,and the stock market suddenly plummeted.A lackey will never have a good outcome.

China's stock market and real estate had previously almost fallen to rock bottom,but it was precisely because of the sharp decline that a huge space was created,the belly was extremely empty,and the power of the capital reservoir became even greater.The LPR remains unchanged,yet the stock market and real estate are being flooded with liquidity,which is a completely opposite operation.It seems that Americans need to update their financial knowledge.At the same time,the European Central Bank is also on the move.

Deutsche Bank economist Phil Odonagho stated in a recently released report that the ECB may accelerate interest rate cuts,expecting consecutive rate reductions starting from December until reaching a final interest rate of 2% to 2.5%.This seems to be telling Americans that if you don't act,we will take the lead.As the world begins to flood the market with liquidity,if the US dollar remains stagnant or slows down,it will suffer a significant loss.

However,in the past,global central banks would watch the actions of the Federal Reserve.Why are they now all forcing the Fed in the opposite direction?This is not how the script was written,and it's not in the textbooks either.

At this time,internal dissent is also brewing in the United States.On September 27,St.Louis Federal Reserve Chairman Musallem said in an interview that the weakness of the US economy may exceed current expectations,and the labor market may also be weaker than expected.If this is the case,then a faster pace of interest rate cuts may be appropriate.

Previously,Federal Reserve Governor Christopher Waller also mentioned that if the data weakens more quickly,he would be willing to cut interest rates more aggressively.

Is this forcing the Federal Reserve to accelerate interest rate cuts,or is it warming up for unconventional rate cuts in October?Now,whether the Federal Reserve cuts interest rates in October or not,it is in a very passive position.This drama is becoming more and more exciting.Regardless,China's economy,financial markets,and real estate are all set to experience an epic rebound,which is a great thing.