Author: Tan Yaling, Independent Economist of China Foreign Exchange Investment Research Institute.
On the one hand, as the experience of the US Treasury Secretary, he believes that the fiscal factor for the Fed to raise interest rates is the strength of support; On the other hand, judging from the US macroeconomic control cycle and historical experience, his views are credible, and the familiarity of the US economic situation is an important basis. As a result, the market's expectations for the Fed's interest rate hike in March have increased, while the expectation of interest rate cuts has basically disappeared, and the emotional speculation has been verified to be a kind of smoke bomb for the Fed or the U.S. macroeconomic management, and the purpose is to promote the depreciation of the dollar. After all, the good economic situation of the United States since the beginning of the year has not stimulated the extremity of the dollar's appreciation, on the contrary, the focus of the dollar's depreciation is obvious. It is the expected stance of the US former ** Summers to raise interest rates that has accelerated the depreciation of the US dollar, which is conducive to the safety of the Fed's interest rate hikes in the future.
On the one hand, Summers in the United States suggested and supported continued interest rate hikes and weakened rate cuts. Former US Treasury Secretary Summers made it clear on Friday that "the probability that the Fed will raise interest rates next remains present, and this probability could be 15%." "It makes more sense for the Fed to keep interest rates high for longer, and Summers hinted that the possibility of a Fed rate hike will cause the market to gradually increase the probability to 20%. Along with its point of view, the Federal Reserve has not provided forward-looking guidance on the medium-term interest rate policy framework as in the past, after all, the coordination of the inflation environment and economic growth is increasingly supporting the long-term goals and objectives of the US dollar monetary policy, and the level of the US dollar neutral interest rate under the new economy will be much higher than the level of the traditional period in the past, but at present, investors have less basis for judgment, especially the structure and logic of the characteristics of the United States, which is not conducive to judging the Fed's understanding of interest rate cuts and interest rate hikes. However, investors have now begun to rehearse the Fed's response to the non-landing of the US economy, that is, high growth in the US economy and high inflation in the United States, and the market expects the Fed to cut interest rates in just a few weeks, and even begins to turn to expect the Fed to raise interest rates. A few weeks ago, Fed Chair Powell's public warning that a March rate cut was unlikely to be ignored was widely expected to be cut in March, but in less than three weeks, markets not only ruled out a March rate cut, but even May looked unlikely. Market swap expectations suggest that confidence in a June rate cut is also faltering, with the Fed expected to delay the rate cut until after July.
On the other hand, I experienced the U.S. problem and observed that the Fed would raise and cut rates at the same time. It is expected that there is a possibility of a 25-point interest rate hike at the Fed's second annual meeting in March this year, because the latest US inflation data from the US Department of Labor in mid-March is a key consideration, which may be an important indicator to stimulate the Fed to raise interest rates before the Fed's meeting on March 21. It is expected that the probability of U.S. inflation**, especially core inflation**, is relatively high, and the Fed's interest rate hike parameters and basis are strongly supported. At present, the international oil ** is close to 80 US dollars, and Citibank expects that the oil ** heavy 100 US dollars is expected to be an important basis for inflation. In addition, the overall stability of U.S. housing **, it is uncertain whether the decline in new housing data is temporary or a trend reversal, but the enthusiasm for buying houses in the United States has not weakened because of high interest rates, and mortgage interest rates have not impacted buyers' enthusiasm for buying houses. In particular, the upward trend of the U.S. service ** has strengthened, which is an important new parameter for the Federal Reserve to be different from the global central bank, and it is also a new trend of consumption upgrading accompanied by the growth of wages in the United States. The subsequent Fed regular meetings in May and June also have the possibility of raising interest rates by 25 points each, and inflation inertia** will be the Fed's reference auxiliary factor, and then the US dollar benchmark interest rate will be raised by a total of 75 points to 600-6.25% is highly likely. During this period, U.S. stocks** and U.S. economic stability were the main supporting environment and auxiliary factors, and the neutral interest rate of the U.S. dollar benchmark interest rate was 5-6%, which was more in line with the U.S. new economic allocation. Subsequently, two regular meetings in August and September maintained the stability of interest rates and responded to economic structural problems and political turmoil. Finally, at the November meeting and the last meeting in December, the Fed may consider cutting interest rates, and the safe landing of the United States is a suitable environment for the Fed to cut interest rates. In 2024, the Fed will raise interest rates and cut interest rates at the same time, which is a new angle for the US dollar interest rate determined by the basis of the new economic structure of the United States.
In the face of the above-mentioned Fed interest rate jumping up and down, it is inevitable that the global financial market will suffer, and the focus of the US problem is mainly on the interests of the United States, especially the purpose of harming others, which is the foundation of the unchanging strategy and logic of the United States. In addition, the international market has been uneven development differences, this will be the Federal Reserve both interest rate hikes and interest rate cuts, resulting in financial risks and even more severe crises, the United States will make a smooth transition, the world will face risk pressure worthy of vigilance.