U.S. Rate Cut Not Easy; India's Moves Not Simple Either
The United States is living through tight times, with everything seeming to be on the verge of a critical moment.
However, China is not idle either, and it might soon give the United States a hard time, while India is also on edge, indecisive at this moment...
The United States' "interest rate hikes" and "interest rate cuts."
Whether the United States "hikes" or "cuts" interest rates is not solely up to the United States; it is determined by the Federal Reserve, also known as the "central bank" of the United States.
In 2008, when the global financial crisis erupted, countries around the world responded to the crisis by adopting quantitative easing measures in their monetary policies, which became a common practice and was promoted worldwide.
However, times have changed, and as the global economy gradually recovers, maintaining low-interest-rate policies seems increasingly inappropriate.
The continuation of low-interest-rate policies can stimulate borrowing demand from businesses and individuals, which may lead to inflation or even create bubbles. Therefore, it is necessary to moderately raise interest rates.
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Just as China decided at the end of 2017 to exit the easing policy, adjust its monetary policy, and moderately raise interest rates to guard against financial risks.
The reason for "interest rate hikes" is to prevent inflation.
In 2018, influenced by the Trump administration's tax cuts and increased spending, the U.S. economy grew rapidly, unemployment rates dropped to the lowest level in over half a century, and business investments also showed a significant recovery.These signs indicate that the U.S. economy is gradually moving towards robust growth.
To guard against inflation, the Federal Reserve has begun to consider raising interest rates.
At the Federal Open Market Committee in March this year, most members supported continuing to increase interest rates.
At the same time, the yield on the U.S. 10-year Treasury note has climbed to 3.1%, reaching a new high in nearly seven years, and some economists believe that this climb is driven by optimistic expectations for the future trend of the U.S. economy.
Of course, some believe that this optimistic expectation is unrealistic and that the Federal Reserve should pause interest rate hikes when financial markets experience fluctuations.
An extreme view holds that if the current actual growth of the U.S. economy exceeds the potential growth rate, then the Federal Reserve should pay more attention to inflation rather than unemployment.
This view believes that the risk of raising interest rates now is over-regulation, which could lead to an economic recession in the future.
These different views reflect a significant divergence in perspectives on the future of the U.S. economy.
In this situation, the Federal Reserve needs to weigh current economic data and future risks and formulate reasonable monetary policy measures.
China's profound intentions in "cutting interest rates".Brexit, political turmoil in Italy, Japan's long-term stagnation, Saudi royal family disputes, the Turkish lira crisis, and Venezuela's plunge into chaos...
Behind the prosperity of financial markets, there are hidden tremendous risks and uncertainties.
In this context, it seems to have become a necessary choice for the Federal Reserve to lower interest rates to support economic growth.
However, what if the Federal Reserve insists on raising interest rates in this situation?
Still insists on raising interest rates and not relaxing monetary policy.
In this way, it also means that it will further intensify global financial turmoil and market uncertainty.
This may convey two clear messages to the outside world for China.
The first point is to show that China's influence in the financial market and monetary policy is continuously increasing, which is closely related to its position as the world's second-largest economy.
The second is to show China's important contribution to global financial stability and economic prosperity.
In addition, it is a sign that China will play a more active role in the future global financial governance and reform process.Of course, this will also require China to take on more global responsibilities.
On the other hand, China also has reasons to refuse to bear too much responsibility: Although China has become the world's second-largest economy and has significant influence in many aspects, it is still a developing country.
The Western world should not make too harsh demands on China, nor can it shift all the responsibility onto China.
The West should deeply reflect on its own problems and actively seek solutions.
Especially in terms of global governance and reform of the world financial system, Western countries should take the initiative to cooperate with emerging economies to find a common path to development.
India's "helplessness" in "interest rate hikes".
Recently, behind the tense situation of the U.S. central bank, India has also become nervous.
Although playing an important role in the global pattern, India is facing huge pressure and challenges.
At the same time, in the confrontational competition between India and China, the Indian authorities seem to be confused and helpless about China's actions as its largest trading partner and one of its strongest competitors.
To some extent, the challenges faced by the Indian economy are closely related to China.Relevant data indicates that from September 2016 to February 2018, India's trade deficit with China surged to $48.19 billion (compared to only $8.63 billion in the same period of 2016).
In May, another astonishing figure was revealed: between April 2018 and May 2018, India's commodity imports increased by 37.6% year-on-year, reaching $8.8 billion.
At the same time, India, which plays one of the important roles in the global landscape, is also facing tremendous pressure and challenges.
Despite the authorities' attempts to cope with internal and external pressures by adopting a series of reform measures, the Indian economy still faces many challenges.
Reports suggest that after several consecutive quarters of slowdown, the Indian economy has shown signs that consumption, manufacturing, and other fields are also on the path to recession.
In this context, the Indian authorities also urgently need to take more proactive measures to stimulate domestic demand, promote manufacturing growth, and cultivate emerging industries.
However, these measures seem to have not effectively revitalized the economy.
Data shows that although India's industrial production sector has achieved good growth performance (manufacturing output value increased by 6.9% year-on-year), consumer goods production has shown a negative growth trend (decreased by 0.4% year-on-year).
In addition, data also shows that although India's industrial production sector has achieved good growth performance (manufacturing output value increased by 6.9% year-on-year), consumer goods production has shown a negative growth trend (decreased by 0.4% year-on-year).
In this context, the Indian authorities urgently need to take effective measures to stimulate economic growth and restore consumer confidence.In addition to this, there is a more critical issue at hand: how to deal with a potential trade war initiated by the United States?
First and foremost, under no circumstances should China be allowed to sacrifice its core interests;
Secondly, it is essential to balance the relationship between the two parties;
Lastly, seeking alternative partners and exploring multilateral cooperation models are also crucial.
Although our country plays a significant role and holds an important position today, the future still presents certain challenges.
I believe that our country's leaders have the capability to tackle various challenges and promote sustained and stable economic growth for our nation.
The author believes
Just as the powerful figures in history have said: "The world has never been fair";"Survival of the fittest";
"You are incompetent";
"You do not accept";
"Well, there's nothing that can be done about it."
Therefore, no matter what, one must protect their core interests at all costs.
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