Did you know?

The Federal Reserve has just cut interest rates by 50 basis points,which shows a great deal of determination.

The economists at ING Group said that the Fed is trying to quickly adjust the interest rates to a "middle-of-the-road" position.

Why?

They're afraid that the economy might slide into a recession.

Look at it this way,the current economic growth rate is not bad,the stock market is soaring high,inflation is above target,and the unemployment rate is enviably low.

You'd think that such a drastic interest rate cut at this time is not a conventional move.

But the Fed said they must "steadfastly" protect employment and control inflation.

The most important thing now is to prevent an economic downturn,so the interest rate cut must be decisive!

Speaking of which,there's a lot of economic accounting behind this rate cut.

The ING economists analyzed it very logically.

They said,theoretically,with the economy doing so well,the Fed could have taken it slow,just cutting by 25 basis points as a token gesture.

But why did they choose 50 basis points?

It's because recent economic data is not very optimistic.

For example,the Beige Book mentioned that out of twelve Federal Reserve Bank districts,only three reported economic growth,and the rest,more than seventy percent,were either flat or contracting.

This is not a good sign.

So,the Fed has to act quickly,transforming their policy from a "tight leash" to a "gentle embrace," allowing the economy to catch its breath.

When it comes to interest rate cuts,we also need to discuss its impact on the US dollar.

You know,as soon as the dollar cut its interest rates,it fell immediately.

But then Fed Chairman Powell spoke up,saying that they won't just cut 50 basis points on a whim,and the dollar rebounded a bit.

But this rebound is only temporary.

The experts at ING said that the dollar is like a deflated balloon now,with net short positions slowly accumulating,just waiting for the day to let it all out in one breath.

What's more interesting is that the trend of the dollar is also related to the US election.

Experts predict that if the dollar continues to be so weak,by the November election,if Trump wins,the dollar might make a "comeback," especially for those who were short on the dollar,they might end up crying.

But if Harris takes office,the dollar might continue to "slide down the slippery slope" until 2025.

Let's talk about the steepening curve in the financial market.

It might sound a bit dizzying,but to put it simply,the market thinks the Fed's interest rate cut is quite significant,so expectations for future interest rates have also changed,and the gap between long-term and short-term interest rates has widened.

As a result,the market's reaction has been quite positive,thinking that the risk has decreased,and interest rates have also fallen a bit.

So,friends,the Fed's 50 basis point interest rate cut is not a small matter.

It affects the nerves of the global economy and also affects everyone's wallet.

We must always pay attention to the changes in international finance,and don't let our wallets "drift with the tide."

After all,the world is changing fast,and we must learn to follow the trend to live a stable life.