news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

on september 18, u.s. federal reserve chairman powell attended a press conference in washington. the u.s. federal reserve announced on the 18th that it would lower the target range of the federal funds rate by 50 basis points to a level between 4.75% and 5.00%. xinhua news agency

the federal reserve announced a rate cut, the first in more than four years.

the dust has settled on the rate cut

on the 18th local time, the federal reserve announced a sharp interest rate cut of 50 basis points, lowering the target range of the federal funds rate to 4.75%-5%.

after the resolution was announced, u.s. stocks rose sharply, spot gold rose nearly $20 in the short term, and the u.s. dollar index fell 40 points.

the fed's dot plot shows that the median forecast for the federal funds rate at the end of 2024 is 4.4%, compared with 5.1% previously. among the 19 officials, two believe that after this meeting, interest rates should not be cut further in 2024; seven believe that interest rates should be cut by another 25 basis points, nine believe that interest rates should be cut by another 50 basis points, and one believes that interest rates should be cut by another 75 basis points.

source of dot plot: federal reserve official website

the federal open market committee statement issued by the federal reserve said that recent indicators show that economic activity continues to expand at a solid pace. job growth has slowed and the unemployment rate has risen, but it remains at a low level. inflation has made new progress toward the 2% target but remains at a high level. the committee will carefully assess the latest data, the changing outlook, and the balance of risks when considering further adjustments to the target range for the federal funds rate.

previous data showed that the number of non-farm jobs in the united states increased by 142,000 in august, with new jobs better than the previous value but lower than expected; the unemployment rate ended four consecutive increases and fell slightly to 4.2%.

the cooling trend of us inflation continues. according to data released by the us bureau of labor statistics, the cpi rose 2.5% year-on-year in august, in line with expectations, down 0.4 percentage points from the previous value, slowing down for the fifth consecutive month and the lowest level since february 2021. the core cpi rose 3.2% year-on-year in august, in line with expectations and the previous value, after slowing down for four consecutive months, and rose 0.3% month-on-month, slightly higher than the expected and previous value of 0.2%, the largest increase in four months.

what impact will the rate cut have? according to cnbc, richard carter, head of fixed-rate research at quilter cheviot, said that as an important driver of global economic growth, this will inevitably have an impact on global asset prices, including gold. this week, gold prices hit a record high in anticipation of the fed's action. he explained that rising interest rates will drag down gold because rising interest rates make fixed-income investments such as bonds more attractive; oil and other commodities that are usually denominated in us dollars tend to be boosted by rate cuts because lower borrowing costs can stimulate the economy and increase demand.

shenwan hongyuan analyzed that there is a time lag in the transmission of monetary policy to the real economy, and the sensitivity of the real economy to interest rates has been declining for a long time, so it is not believed that the interest rate cut in september can immediately reverse the weakening trend of the us economy. however, according to quantitative calculations, the fed's interest rate cut has boosted consumer spending, residential sales, and fixed asset investment, which are sensitive to interest rates.

how does it affect a-shares?

how will the us interest rate cut affect a-shares? haitong securities said that the fed's preventive interest rate cut may help improve the liquidity of a-shares, and pay attention to the verification of fundamental repair in the medium and long term. from the perspective of liquidity, the fed's interest rate cut may improve the macro and micro liquidity of a-shares in the medium and short term, helping a-shares to rise. from a fundamental perspective, the medium and long-term trend of a-shares is related to fundamentals, and the boost of interest rate cuts on the fundamentals of a-shares still needs to be observed.

from the perspective of industries, in the short term, the financial industry, which directly benefits from the improvement of macro liquidity, outperformed first, while the consumption industries favored by foreign capital, such as food and beverage, beauty and skin care, have always been at the forefront of growth; in the medium term, the social service and power equipment industries have gradually outperformed, and the interest rate-sensitive technology industries such as electronics and computers have gradually gained an advantage. looking forward, haitong securities believes that china's superior manufacturing with better fundamentals is expected to become the medium-term main line of a-shares.

according to analysis by boc securities, based on historical experience, after the first landing, overseas risk assets may experience fluctuations caused by phased recession transactions. in the next two weeks, we need to focus on the performance of global assets and changes in market style after the implementation of domestic policies and the fed's interest rate cut.

citic securities believes that my country's export growth rate may be under pressure in the fourth quarter, which may make the problem of insufficient demand more prominent. the export trend next year will depend on when the economic fundamentals are stabilized and whether the united states can cut interest rates.

what is the direction of china’s monetary policy?

in addition to the federal reserve, several central banks have recently announced interest rate cuts, and global monetary policies have gradually turned to easing. in early august, the bank of england lowered its benchmark interest rate by 25 basis points to 5%; on september 4, the bank of canada announced a 25 basis point cut in its benchmark interest rate to 4.25%; the european central bank announced a second interest rate cut on september 12; on september 18, the indonesian central bank lowered its key interest rate by 25 basis points to 6%, which is expected to be 6.25%.

what will be the subsequent monetary policy of the people’s bank of china?

on september 5, the state council information office held a series of press conferences on "promoting high-quality development". zou lan, director of the monetary policy department of the people's bank of china, said that policy adjustments such as lowering the reserve requirement ratio and interest rates still need to observe economic trends. the policy effect of lowering the reserve requirement ratio at the beginning of the year is still continuing to show. at present, the average statutory deposit reserve ratio of financial institutions is about 7%, and there is still room for improvement. affected by factors such as the speed of bank deposits diversion to asset management products and the extent of the narrowing of bank net interest margins, there are still certain constraints on the further decline of deposit and loan interest rates.

cicc pointed out that in the short term, the probability of lowering the reserve requirement ratio is greater than that of lowering interest rates among the "incremental policy" options. the growth rate of social financing fell slightly in august, and the growth rate of social financing in the non-government sector fell faster. government bonds are the main factor supporting social financing; government bond issuance increased, but fiscal deposits rebounded significantly. in august, the fiscal revenue was still recovering liquidity and dragged down m2. the actual effect of fiscal expansion has not yet been reflected, and subsequent investment remains to be observed.

citic securities predicts that domestically, the probability of increasing the policy of stabilizing growth within the year is increasing. in terms of monetary policy, there is room for lowering the reserve requirement ratio and interest rates. it is expected that the deposit reserve ratio may be lowered by 25bps in september, and the 7-day reverse repurchase rate may continue to be lowered by 10bps in the second half of the fourth quarter. in terms of fiscal policy, the acceleration of special bonds may be further accelerated.

(original title: the federal reserve’s 50 basis point interest rate cut is finalized! how will it affect a-shares?)