On July 3, 2025, United States Secretary of the Treasury, Besent, delivered a remarkable comment that shook global financial markets. In an interview with Odaily, he said that the US is currently experiencing very high "real interest rates".
What do you mean by real interest rates?
Simply put, these are interest rates that have been adjusted for inflation. If inflation is low but interest rates remain high, then society and entrepreneurs will find it increasingly difficult to borrow or invest because the rate burden feels very high. It risks hindering economic growth.
Besent added, if the Fed does not immediately lower interest rates at its next meeting, then it could be that a larger rate cut will occur in September.
Why Is It Important for Traders and Investors?
1. Impact on the US Dollar (USD):
If interest rates are lowered, then the value of USD could weaken. Usually, traders will start preparing to move assets into other forms such as gold, crypto, or stocks.
2. Impact on the crypto market:
Crypto markets like Bitcoin and Ethereum tend to go up when interest rates fall. The reason is simple: when interest rates are low, people are more likely to look for riskier but potentially high-yielding investment alternatives - including crypto.
3. Impact on the stock market:
Stocks also typically rise because companies can borrow less, which means they can expand their business or increase profits.
What Can We Do Now?
🔹 Monitor the Economic Calendar:
Check the date of the Fed's next meeting. There's usually a FOMC meeting every six weeks. This is an important moment to see if there will be any interest rate cuts.
🔹 Investment Portfolio Management:
If you hold USD assets, consider diversification. But don't be in a hurry, keep an eye out for official news confirmations and other market signals.
🔹 Develop short and medium term strategies:
For traders, this could be a good opportunity to swing trade by September. For long-term investors, it's time to shrink quality assets before prices go up.
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