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The Federal Reserve does not cut interest rates, making 'money more expensive.' What are the impacts?
1. On the United States:
• Prices may continue to rise: For example, gasoline and daily goods prices may not drop, as high interest rates suppress consumption, but inflation in the U.S. is still somewhat high (the February CPI rose by 2.8%), fearing that after a rate cut, people will spend more, making it even harder to control prices.
• High pressure on businesses: Especially for technology companies and commercial real estate. For example, companies like Tesla face higher borrowing costs, which may lead to layoffs or reduced investments; the vacancy rates of shopping malls and office buildings may continue to rise, potentially triggering bad debt risks for banks.
2. Global implications:
• Debt crisis in poor countries: Countries like Turkey and Egypt, which owe a lot in U.S. dollar debts, will find it even harder to pay interest, and may struggle to 'borrow new debt to pay off old debt.'
• Stronger U.S. dollar: Other countries' currencies may depreciate relative to the dollar, for instance, the Chinese yuan may drop, making Chinese exports cheaper (beneficial to foreign trade companies), but imported oil and chips will become more expensive, potentially leading to higher domestic oil prices.
3. Related to China:
• A-shares may diverge: Foreign capital may prefer to buy cheap Chinese assets (such as technology stocks and leading consumer firms), but export businesses (like textile factories) may be hit by increased tariffs from the U.S., making financing harder for highly indebted industries (like real estate).
• International students feel the pinch: Tuition and living expenses converted to RMB are more expensive, which may require them to economize.
• Central bank under pressure: They need to balance the depreciation of the yuan with the domestic economy, which may delay interest rate cuts, making it difficult for businesses to lower borrowing costs.
Summary: The Federal Reserve not cutting interest rates is like 'holding onto the purse strings,' causing the world to tighten up—America fears inflation, while other countries fear a dollar squeeze, and ordinary people may feel the effects as high prices, difficulty in loans, and increased investment risks.
1. On the United States:
• Prices may continue to rise: For example, gasoline and daily goods prices may not drop, as high interest rates suppress consumption, but inflation in the U.S. is still somewhat high (the February CPI rose by 2.8%), fearing that after a rate cut, people will spend more, making it even harder to control prices.
• High pressure on businesses: Especially for technology companies and commercial real estate. For example, companies like Tesla face higher borrowing costs, which may lead to layoffs or reduced investments; the vacancy rates of shopping malls and office buildings may continue to rise, potentially triggering bad debt risks for banks.
2. Global implications:
• Debt crisis in poor countries: Countries like Turkey and Egypt, which owe a lot in U.S. dollar debts, will find it even harder to pay interest, and may struggle to 'borrow new debt to pay off old debt.'
• Stronger U.S. dollar: Other countries' currencies may depreciate relative to the dollar, for instance, the Chinese yuan may drop, making Chinese exports cheaper (beneficial to foreign trade companies), but imported oil and chips will become more expensive, potentially leading to higher domestic oil prices.
3. Related to China:
• A-shares may diverge: Foreign capital may prefer to buy cheap Chinese assets (such as technology stocks and leading consumer firms), but export businesses (like textile factories) may be hit by increased tariffs from the U.S., making financing harder for highly indebted industries (like real estate).
• International students feel the pinch: Tuition and living expenses converted to RMB are more expensive, which may require them to economize.
• Central bank under pressure: They need to balance the depreciation of the yuan with the domestic economy, which may delay interest rate cuts, making it difficult for businesses to lower borrowing costs.
Summary: The Federal Reserve not cutting interest rates is like 'holding onto the purse strings,' causing the world to tighten up—America fears inflation, while other countries fear a dollar squeeze, and ordinary people may feel the effects as high prices, difficulty in loans, and increased investment risks.
Disclaimer: Includes third-party opinions. No financial advice. May include sponsored content. See T&Cs.
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