On the early morning of September 19th, the Federal Reserve announced an interest rate cut.

The Fed lowered the interest rates from 5.25%-5.5% to 4.75%-5.0%, a one-time reduction of 50 basis points, a significant cut that exceeded many people's expectations.

Countries around the world can now breathe a sigh of relief.

Influenced by the news of the rate cut, the three major U.S. stock indices saw an increase in their rise, the gold index reached a new high, and the offshore exchange rate of the Chinese yuan hit a recent peak.

The Fed's substantial rate cut is because the U.S. urgently needs to step on the gas for its economy.

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If the U.S. did not cut interest rates, under high interest rates, businesses and people would be reluctant to take out loans and consume, which would drag down the economy.

The U.S. rate cut is also due to inflation being under control.

The inflation rate in August was 2.5%, the lowest in over three years.

Without a rate cut, the U.S. economy might cool down.

Therefore, the U.S. has started a new round of interest rate cuts.

The Fed entering a rate-cutting cycle is a positive for China, which is reflected in the following aspects: 1.

It is beneficial for the Chinese yuan exchange rate.

With the Fed cutting rates, people will reduce their exchange of dollars, some money will flow out of U.S. banks, the demand for dollars will decrease, and the yuan will appreciate relatively.

As of 7:30 AM today, the exchange rate of the U.S. dollar to the Chinese yuan was 7.0819.

In the future, the yuan exchange rate is likely to remain strong.

2.

It is beneficial for China's real estate market, stock market, and economy.

With the Fed cutting rates, hot money will flow out of U.S. banks, looking for value lows, and some funds will flow into China's assets and capital markets.

Some people say that after the Fed's rate cut, the interest rate is still above 4%, while China's interest rate is only around 2%, so why would hot money come to China?

Because capital looks at expectations; exchanging dollars for yuan, although the interest is less, the current price of yuan assets is cheap, and early investment will yield greater returns in the future.

The Fed's rate cut is also a positive for China's stock market, but the rebound of the stock market is predicated on an economic rebound, so it still needs time.

3.

It is beneficial for China's foreign trade.

The Fed's rate cut and the appreciation of the yuan are good for China's imports because imported goods are cheaper; for China's exports, it has both advantages and disadvantages.

On one hand, after the yuan appreciates, China's export competitiveness decreases, but on the other hand, after the rate cut, the economic pressure on various countries decreases, and purchasing power will continue to recover, which is beneficial for China's exports.

In the long term, the rate cut is more beneficial than detrimental to China's foreign trade.

4.

The Fed's rate cut gives China more room for rate cuts, which also means the era of low interest rates in China is coming.

Especially the interest rate on existing housing loans in China also has the possibility of decreasing.

It should be said that from today, the U.S. officially enters a rate-cutting cycle, and the global economic environment will become more relaxed, creating favorable conditions for the recovery and rebound of China's economy.