The results of the Federal Reserve's December interest rate meeting were released, keeping interest rates unchanged and deciding not to raise interest rates for three consecutive months. This decision is not unexpected, as there are many crises hidden behind the US economy, such as signs of depleting household savings and a trend towards a weakening economy. Although the market generally believes that the Fed will not raise interest rates, the answer to whether to raise interest rates next year or cut them is not in the United States but in China. The US dollar rate hike is a war that cannot be seen, and the final target is likely to be China. This article will examine the motivations and possible outcomes behind the US dollar's rate hikes, as well as China's key determinants in this war.
The US economic data hides a crisis under the façade of prosperity, which is one of the important reasons why the Fed decided not to raise interest rates in December. For example, the year-on-year CPI growth rate in November was 31% up from 3.1 in OctoberA slight drop of 2% could be a sign that US household savings are about to run out. In addition, although the U.S. economy performed strongly in the third quarter, the weakening trend in the fourth quarter was clear. These figures hint at a potential economic crisis.
However, Fed Chair Jerome Powell made some "** remarks" after the meeting, suggesting that the rate hike cycle may be nearing its end. However, this does not mean that the US will stop raising interest rates, but rather the question of when to cut them. Powell's speech does not represent the official conclusion of the Federal Reserve, let alone the views of the big capitalists behind it. Therefore, we cannot easily believe that the US dollar rate hike cycle is over.
The ultimate target of the US dollar rate hike is likely to be China. In addition to raising interest rates, the United States is creating geopolitical crises around the world and even triggering wars. All of this is to coincide with the US dollar's interest rate hikes, so that global capital will accelerate the search for safe havens, and thus make the United States the only safe place. Judging from the recent frequent actions of the United States against China, we have reason to believe that China is likely to be the target of the final decisive battle.
So what are the goals of the Americans?What do they hope for to stop raising interest rates?The answer is likely to be RMB assets, especially **, the property market and the foreign exchange market. China's property market has fallen to its lowest point, and some of the leading property companies' dollar bonds are at great risk. ** It also fell below 3,000 points, while the foreign exchange market is relatively stable, and the foreign exchange reserves are large, which is not easy to be manipulated by the United States. However, China's property market is not completely open, and it is not easy to crack down on it.
As a result, the U.S. leadership has been exerting intense pressure on China to further open up its financial markets. Although we have made some concessions, such as the lifting of restrictions on foreign investment, this still does not satisfy the aspirations of the American capitalists. Now, the United States is exerting maximum pressure to see how much concessions China can make. If we don't back down, the Fed is likely to continue raising interest rates.
Whether interest rates will be raised or cut next year is uncertain for the whole world, and even the United States itself does not know. It depends on China's decision. The US dollar's interest rate hike is a battle of maximum pressure, aimed at maximizing the global interests of the United States and the big capitalists behind it. Therefore, the Fed will stop raising interest rates only when it reaches its limit.
China's decision will be the most critical decisive factor. Whether we can concede, and by how much, will play a key role in the final battle. Previously, China had made some concessions, but this was still not enough to meet the demands of the United States. If we continue to insist on not making concessions, the Fed is likely to continue raising interest rates.
The Fed's decision not to raise interest rates in December does not mean that the rate hike cycle is over, and the outcome of next year's rate hike or rate cut remains uncertain. The ultimate target of the dollar's interest rate hike is likely to be China, which plays a key role in this war. China's decision will determine whether it raises or cuts interest rates. In the face of extreme pressure from the United States, we must carefully weigh our own interests and make informed decisions.