It's already 2024, so will the United States cut interest rates or not?

It's 2024 now, will the Federal Reserve actually lower interest rates?

Since last October, the Federal Reserve has been continuously sending signals about interest rate cuts, indicating that it would soon lower interest rates. Capital responded accordingly, with the U.S. stock market soaring and international gold prices continuously rising, seemingly leading to a global economic boom.

However, five months have passed, and the Federal Reserve has been delaying the timing of the interest rate cut. The previously promised rate cut in March was postponed to June, and now it has been pushed back to July. It seems that the interest rate cut will be indefinitely postponed.

Now, experts have stated that the Federal Reserve will "not cut interest rates unless necessary," as the U.S. economy is doing so well and the Federal Reserve has few options to combat inflation. Interest rate cuts are not possible; instead, they can only use "verbal rate cuts" to give the market some hope.

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Why won't the Federal Reserve cut interest rates in the short term? Is the expectation of rate cuts a scam? How will U.S. monetary policy proceed?

Interest rate cuts as a smokescreen by the Federal Reserve?

As the central bank of central banks, the Federal Reserve's monetary policy has a very important impact on the economies of various countries and the global financial system. Even the Federal Reserve's attitude towards a certain monetary policy can affect the global financial landscape.

The Federal Reserve's monetary policy affects the global economy. For example, last October and November, when inflation data fell sharply, Federal Reserve officials indicated that they were considering starting to cut interest rates. At that time, the U.S. financial market began to experience severe turmoil. Why have U.S. stocks been rising recently? Why are gold prices continuously increasing? The important reason is that the Federal Reserve said "considering interest rate cuts" at that time.But has the United States really cut interest rates? Not at all.

So far, the timing of the rate cut has been postponed time and time again, and the Federal Reserve still maintains a federal funds rate of 5.25%-5.5%. The United States continues to maintain high interest rates, which is actually a continuation of harvesting China and the world.

The current U.S. benchmark interest rate is 5.33%.

Therefore, many economists have been speculating when the United States will cut interest rates. However, as economic data is gradually disclosed, the possibility of the United States cutting interest rates is gradually diminishing. Let's analyze from two aspects.

The first is the "soft landing" of the U.S. economy.

Looking at the labor market, the U.S. labor market is still very hot, with its unemployment rate below 4% for 25 consecutive months, and the number of job vacancies remains at a high level of 8.8 million people. This means that the U.S. economy is still very good. After all, the average value of the national urban surveyed unemployment rate in China from January to February is 5.3%, which is more than 1.3% higher than that of the United States.

The U.S. unemployment rate is very good, currently only around 4%.

The stability of employment means that although the U.S. economy has declined compared to before, it is not as bad as it seems. One of the main purposes of the Federal Reserve's interest rate cut is actually to prevent the collapse of the U.S. economy.

But now, we have to admire the United States. After all, it is an old capitalist country with the dollar hegemony and U.S. debt borrowing, and it still has the ability to stimulate the economy, which is much stronger than ours.

The second is U.S. inflation.Why doesn't the United States lower interest rates? The main reason is still that the inflation issue has not been completely resolved. As mentioned earlier, the U.S. economy is doing well, with a hot job market and strong demand. An overheated economy is extremely likely to lead to an escalation of inflation.

According to data, the U.S. super core inflation has rebounded for six consecutive months, and the CPI index has continued to rise month-on-month in January-February, which means that inflation in the United States remains stubborn.

The rebound of U.S. inflation has exceeded expectations.

Not only that, but there is still inflationary pressure in various industries across the United States. For example, the U.S. real estate industry has encountered many problems. The high interest rates set by the Federal Reserve have led to a collapse in the U.S. real estate industry, with a significant drop in real estate prices, leading to a continuous decrease in new housing construction in the United States.

The reduction in new housing construction, in turn, has led to a continuous increase in rental demand in the United States and the upcoming rent inflation. This situation occurs in various industries across the United States. Therefore, it also affects the probability of the United States lowering interest rates.

After all, if the inflation issue is not resolved, the cost of living for the American people will be higher. It is important to note that the United States, as a beacon country, is known for causing trouble and engaging in "protests and demonstrations." Moreover, this year is the election year of 2024.

The United States in an election year is full of turmoil.

Of course, there is also an indicator called the "nominal neutral interest rate," which represents "the interest rate at which the economy can achieve its potential output level without inflationary or deflationary pressure."

It sounds complicated, but in fact, this is the inflation target that the United States wants to control. Currently, the target for the U.S. nominal neutral interest rate is 2.4%-2.6%, while economists believe it should be around 2.5%-3%, or even 3.8%. If we look at this target, the room for the Federal Reserve to lower interest rates is actually not very large.

That is to say, from now until the United States gives up on lowering interest rates, there is only about 1.7% of room for interest rate cuts. At this point, the United States will no longer lower interest rates, and the reduction of room means that the Federal Reserve needs to be more cautious with each interest rate cut.Lower interest rates or higher interest rates? Is the Federal Reserve intervening in the election?

In addition to economic factors, what the Federal Reserve worries about even more is "intervening in the election."

It is important to understand that the Federal Reserve not only affects the U.S. economy but also the economies of countries around the world. Its power and credibility come from "independence," not from being a lackey for the U.S. government. Therefore, maintaining independence is crucial.

Now, with the 2024 election approaching, U.S. President Biden's demand is to lower interest rates as soon as possible to stimulate the economy. As mentioned earlier, the current economic situation in the United States does not require a hasty reduction in interest rates, and the current inflation rate in the United States, which has a neutral interest rate, also does not support a hasty reduction in interest rates.

If Powell were to lower interest rates prematurely, it would not be reasonable.

So if Powell lowers interest rates at this time, it would mean showing favor to Biden in the 2024 election. In fact, if it were an ordinary department, showing favor would be fine, but this is the Federal Reserve, the central bank that directly affects the economies of countries around the world. Therefore, the Federal Reserve must maintain a certain degree of independence.

Engaging in unnecessary rate cuts at this time is actually a loss of independence. It should be noted that Powell's sudden announcement last year of considering rate cuts has already been criticized by Wall Street, calling him the "least independent Federal Reserve chairman." This time, Powell wants to continue to lower interest rates and must consider this point, right?

Does the manufacturing data kill the expectation of rate cuts? Rate cuts are just lies that can be changed at any time.

Just the day before yesterday, the United States released the latest ISM manufacturing data for March. The data reflected that the level of manufacturing in the United States is recovering significantly, with the PMI index exceeding 50% and returning to the expansion range. This means that the U.S. economy is growing stronger than expected.

Is the manufacturing data strong? Is the U.S. economy continuing to recover?The U.S. economy is gaining strength, U.S. Treasury bonds continue to plummet, the U.S. dollar index rises, and expectations for U.S. rate cuts have fallen again. So you see, the economic data for the U.S. from January to March shows a sequential increase in inflation, a strong manufacturing index, and a soft landing for the U.S. economy. All the data indicates that the current expectations for rate cuts in the U.S. are continuously diminishing.

Therefore, rate cuts are out of the question. In fact, the Federal Reserve is holding onto the dollar hegemony and constantly using "expectation management" to regulate and manipulate the market. Whether it's China or Europe and Japan, they are all being led around by the U.S.

The U.S. continues to "harvest the world"

So now everyone understands that the Federal Reserve is using expectations to regulate rate cuts, and the root of these expectations comes from the economic data of the U.S., which can be fabricated or "revised" by the U.S.

U.S. monetary policy can affect the whole world, and for now, rate cuts are just a lie. The U.S. will maintain high interest rates for a long time and continue to use the dollar's interest rate hike as a sickle to harvest the world.