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central banks in many countries around the world are about to usher in a new round of interest rate cuts, and global monetary policy is about to enter a new stage this fall.

the market has almost completely priced in the possibility of a rate cut by the federal reserve in september, which means that the federal reserve will also likely join the global rate cut trend. previously, the european central bank, the bank of england, the people's bank of china, the swiss national bank, the swedish central bank, the bank of canada, the central bank of mexico and other central banks have announced rate cuts and jointly lowered key interest rates.

powell sent the clearest signal ever of a rate cut at the annual jackson hole symposium, and current pricing suggests expectations are high for the fed to cut rates by three quarter-points before the end of the year, according to the cme's fed watch tool.

investors are closely watching the u.s. employment data to be released on september 6, which will provide key information on whether the federal reserve will cut interest rates by 25 basis points or 50 basis points this month.

central banks around the world are generally turning to loose monetary policy

since the beginning of this year, central banks around the world have started to cut interest rates. on june 6, the european central bank cut interest rates by 25 basis points as expected, the first time since 2019; on august 1, the bank of england announced that it would cut interest rates by 25 basis points to 5%, the first rate cut in four years; the swiss national bank also lowered its benchmark interest rate to 1.25% twice this year; the people's bank of china cut interest rates by 20 basis points in july this year, exceeding expectations.

at present, people's concerns about the possibility of a recession in the us economy have eased. germany, a traditional manufacturing powerhouse, has a relatively weak economic performance, while countries such as the uk, which are more service-oriented, have shown solid growth.

the european central bank has cut interest rates three times this year, each time by 25 basis points; in contrast to the european central bank, the bank of england has raised interest rates three times this year in an effort to control inflation. although services inflation remains a problem, the market generally expects the fed, the european central bank and the bank of england to continue to implement loose monetary policies in early 2025.

rabobank expects the federal reserve to cut interest rates four times between september and january next year and keep rates unchanged in 2025, which provides the possibility of a stronger dollar in the spring. jane foley, head of foreign exchange strategy at the bank, said:

if the euro appreciates significantly against the dollar, the market may adjust its expectations for ecb rate cuts as the risk of deflation may increase.

in the united states, the outcome of the us election will affect the fed's policy. if trump wins, the tariff policy may trigger inflation and shorten the fed's easing cycle.

the pace of the bank of england's interest rate cuts may be limited by inflation in the services sector, and the pace of rate cuts may slow to once a quarter.

interest rate cuts are inevitable for short-term fluctuations in u.s. stocks, but they still have investment value

generally speaking, interest rate cuts will have a positive impact on assets, but the specific extent and direction of the impact will vary depending on factors such as asset type and market environment.

both european and u.s. stock markets have shown strong rebound momentum in 2024, with the euro stoxx 600 index up nearly 10% so far this year and hitting an intraday record high on friday, while the s&p 500 has risen 19% so far.

the vix index is an important indicator to measure the degree of market panic. the surge in the index in early august reflected the market's concerns about the global economic outlook at the time. however, as time went on, the vix index returned to below the average level. beat wittmann, chairman and partner of porta advisors, said that the market will be affected by a variety of factors in the future.

the market has largely recovered in terms of price momentum, valuations, and sentiment. we are heading into the seasonally weak september and october. therefore, i expect the market to be driven by a variety of factors, including geopolitics, corporate earnings, and ai leaders.

however, wittmann also pointed out that short-term fluctuations are still inevitable. such fluctuations may come from "overdue corrections" and rotations between industries. but he believes that stocks will still be a worthwhile asset class for the rest of this year and 25 years later.

manpreet gill, chief investment officer of standard chartered bank, also believes that the possibility of a soft landing of the us economy is still high. he stressed that as long as the economic downturn can be avoided, the us stock market still has great potential for growth. in addition, he believes that the market's expectation of interest rate cuts is an important factor supporting the stock market.

arnaud girod, head of economic and cross-asset strategy at kepler cheuvreux, said that although the bond and stock markets are currently performing well, investors still have great uncertainty about the future economic situation. although interest rate cuts can help boost the market, they may also bring potential risks.

if the interest rate is cut too many times, it may bring negative economic data, which will weaken corporate profitability. therefore, we should not be too optimistic about the future economic situation.

contrary to conventional wisdom, the stock market appears to be insensitive to changes in interest rates, with big tech companies even rising when interest rates peaked.