At 22:00 Beijing time this evening, Federal Reserve Chairman Powell will deliver a speech at the Jackson Hole Annual Meeting of Global Central Banks. In a sensitive period when monetary policy is about to shift, Powell's speech this time is undoubtedly crucial, and the focus of global attention is mainly on whether the Federal Reserve will cut interest rates in September. Therefore, for this global central bank annual meeting, the world may not be paying attention to the central bank annual meeting itself, but the further confirmation of the Federal Reserve's monetary shift.
Why is it said that it attracts global attention?
First of all, from a global perspective, we are mainly concerned about liquidity issues. The United States is the world's largest economy. The shift in monetary policy will have a great impact on the global market and liquidity. Of course, it will also affect the global exchange rate and global capital markets. Countries around the world will also take corresponding measures because of the shift in U.S. policy. Powell is about to give a speech this time, and it should be inevitable to talk about an interest rate cut in September, and it may also touch on the specific trend of future interest rates that the market is concerned about.
Secondly, the country is actually paying more attention to the Fed’s movements. At present, the US dollar is still relatively strong overall, and we have not been able to go further in our overall easing. We may still be waiting for the Federal Reserve to substantially cut interest rates. After the unexpected interest rate cut in July, there has been no new progress in August, and there is a high probability that we are also waiting for the Federal Reserve to cut interest rates. After all, the Fed will not dare to make any rash moves until it has substantially lowered interest rates. If the Fed fails to cut interest rates, the domestic exchange rate may be under greater pressure. Therefore, the market is looking forward to further loosening of the policy, but in fact the policy also has its own "unspeakable secrets."
Returning to the capital market that everyone is concerned about, there is another question. If the Federal Reserve really cuts interest rates, will our economy and stock market be able to do well?
First of all, the Fed's interest rate cut will cause global capital liquidity to flow to economies such as China, which will bring more foreign capital inflows to China and promote economic growth. The expected appreciation of the RMB will also reduce China's external debt burden and reduce economic risks;
Secondly, for the stock market, with the wave of global interest rate cuts and the increased operating space of domestic monetary policy, the return of cross-border capital and the boost of domestic capital will support and boost the domestic capital market;
And there may be someone here The question we ignore is that if the Federal Reserve cuts interest rates, will China follow suit? If we indeed follow the Fed's interest rate cuts and further loosen monetary policy, then the global wave of interest rate cuts will be theoretically beneficial to the domestic economy and stock market. But if the unexpected does not follow, the benefit to the stock market may be relatively small.
Of course, the last thing I have to mention is that if the stock market is really doing well, the Fed's interest rate cut will certainly have a boosting effect, but ultimately it still depends on whether the domestic economic fundamentals can further rebound. After all, the core contradiction that affects the trend of the domestic stock market still lies within the country. If the economy is doing well, it is a high probability that the stock market will be doing well. And if the economic recovery is still weak, even if the Fed cuts interest rates, which is good in theory, the actual performance may still be different.
