Source: Huidu Finance
Author: Huijie
Global interest rate cuts are becoming more and more intense!
htmlOn the evening of September 12, the European Central Bank announced that it would lower the deposit interest rate by 10 basis points to a historical low of -0.5%, which is also the bank's first interest rate cut since March 2016.The ECB also announced that it will restart quantitative easing (hereinafter referred to as QE) from November 1, with a scale of 20 billion euros per month, and will begin to implement an interest rate grading system.
The European Central Bank expects GDP growth to be 1.1% in 2019, while June is expected to be 1.2%; GDP growth in 2020 is expected to be 1.2%, and in June this year it is expected to be 1.4%. After the news of
was released, the euro and the US dollar exchange rate "dived" straight, and the US dollar index rose strongly, breaking the 99 mark.
spot gold rose more than $6, breaking the $1,510 mark; New York silver price was $18.45 per ounce, with an intraday increase of 1.54%.
Major European stock indexes rose collectively, and US stocks also opened higher.
01
interest rate cut + restart QE
On the evening of the 12th, Beijing time, the European Central Bank announced that it would lower the deposit interest rate by 10 basis points to -0.5%, and maintain the financing rate and loan interest rate unchanged.
At the same time, the European Central Bank changed its interest rate policy guidelines and announced the restart of QE (quantitative easing policy), and will purchase 20 billion euro bonds monthly starting from November 1, and the investment in maturing bonds will last for 2-3 years.
Everyone has noticed that the interest rate of the ECB is now negative, and if you deposit it in the bank, you have to pay the bank money.
European Central Bank President Draghi made a pessimistic speech at the press conference. He said that the policy decisions took into account recent expectations and needed to maintain a highly easing position: on the one hand, the economic downward risks continue, such as geopolitics, protectionism, etc.; on the other hand, inflation pressure is suppressed. How much effect will the rate cut of
02
bring?
"The economic growth slows down more significantly than expected." European Central Bank President Draghi said at a press conference after announcing the rate cut.
As a European economic locomotive, Germany's GDP shrank by 0.1% in the second quarter, and the German Institute of Economics expects the country's GDP to shrink by 0.2% in the third quarter. Germany's PMI fell to 43.6 in September, hovering around the seven-year low, and this year it was all lower than the boom and bust line .
In addition, Italy's manufacturing PMI has also been at the 50 boom and bust line for 11 consecutive months.
However, some analysts believe that the 10 basis point cut rate cut is unlikely to reverse the current economic situation in Europe, and negative interest rate policies will also harm the interests of banking departments and depositors.
Some market insiders pointed out that negative interest rates in Europe have lasted for several years, which has caused considerable damage to the banking system. The ECB's restart of large-scale easing measures will have little effect on an economy that is more affected by external risks, and may even have side effects. Although it can reduce corporate borrowing costs in the short term, it will ultimately further hurt banking profits.
03
Will China follow the rate cut?
ECB has cut interest rates as scheduled, and the market will turn to focus on the upcoming interest rate meeting of the Federal Reserve next week. The market generally expects that the Federal Reserve will cut interest rates by 25 basis points at next week's interest rate meeting.
Recently, Trump has been calling on the Fed to lower interest rates to negative values.
On September 11, two tweets by Trump said that negative interest rates will save interest costs for government debt.
analysis believes that the Fed's decision to cut interest rates by 25 basis points is unlikely to satisfy Trump.
Will China follow the rate cut?
After the central bank announced a reduction in the reserve requirement ratio on September 6, whether the central bank will announce a rate cut in the next step is the focus of the market. From the current perspective of major institutions, the market has differences on whether the central bank will cut interest rates.
Some analysts believe that the central bank's "roadmap" for interest rate cuts has gradually emerged. After tightening the real estate financing policy, reforming the formation mechanism of LPR, and reducing the reserve requirement ratio, the time point for the central bank's interest rate cut may be approaching.
of Evergrande Research Institute, Ren Zeping has also recently called for deflation after taking off the pig, and it’s time to cut interest rates! He analyzed that the downward pressure on the economy is increasing, the core CPI has declined and PPI has been negative for two consecutive months, and the real interest rate has risen, so it is time to cut interest rates.
Some experts have analyzed that if the Federal Reserve cuts interest rates in September, the central bank of my country is likely to simultaneously lower the open market interest rate, and is expected to lower the MLF interest rate by 10-15 basis points, while the one-year LPR interest rate will fall by 15-20 basis points from the current level to further help reduce the interest rate of the real economy.
However, some analysts pointed out that from the perspective of the central bank's open market operations, the possibility of interest rate cuts has dropped significantly.
It is worth noting that interest rate cuts have always been considered a catalyst for the bull market. Starting from November 2014, the central bank cut interest rates several times, triggering the stock market trend at the end of 2014, and later triggering a sharp rise in the property market from 2016 to 2017.
