What Will The Fed'S Second Increase In Interest Rates Bring To China?

With the passage of time, it is appropriate for the fed to increase interest rates gradually and cautiously. It may be appropriate for the fed to raise interest rates in the coming months.

She also said that the US economy has made great progress and has been in a slow recovery.

The labour market is actually improving in any way.

The labour force participation rate has been raised, which is exhilarating.

Prior to the public statement on raising interest rates, Yellen held a "pigeon pie" view.

This is the first time that she has changed her mind recently.

However, in the minutes of the April meeting released by the Fed 10 days ago, most of the Fed officials believed that if the economic data showed that the second quarter economic growth picked up, the employment market continued to be strong and the inflation rate improved to 2%, then the Fed's interest rate increase at June meeting might be appropriate.

And Yellen's position today is more lethal, that is to say:

It is very likely that interest rates will be announced at the latest in the morning of July 28th, and the interest rate increase will be announced in the early hours of June 16th in Beijing.

This is much ahead of expectations.

Influenced by Yellen's position, the dollar index rose sharply.

And the bull market of gold since January has apparently ended. Since 10, the Fed released the minutes of the April meeting, the market has been dropping.

Chinese officials plan to meet the US Federal Reserve's probability of raising interest rates in June during the next year's Sino US dialogue next month (early June).

According to people familiar with the matter, the Chinese delegation will try to confirm that the Federal Reserve is likely to raise interest rates at any time in June or July. Chinese policymakers have prepared plans to deal with the potential impact of the June interest rate hike on the market and the RMB exchange rate.

The news clearly scolded the Central Bank of China and scolded the Fed.

The fed plus not raising interest rates is decided by the vote. Before voting, we need to refer to several economic data. When the data are not released and the voting is not carried out, it is not common sense and boring to ask "plus or not raise interest rates". Therefore, of course, the central bank must fight back.

But it also tells us from another angle.

The second increase in interest rates really has a huge impact.

Because it was widely expected that it would not be possible to raise interest rates until September.

In June, the wind and waves were urgent and the events were frequent: the Sino US economic dialogue, Putin's visit to China, the A share included the Ming Sheng index, the British referendum on Euro retreat, the possible increase in interest rates by the Federal Reserve, and the possible entry of Shenzhen and Hong Kong.

Overall, uncertainty increases.

It is gratifying to learn that China has learned from last year's and January this year.

Squeeze bubble, did not start the stock market policy bull market 2, the bond market, the futures market was cleaned up, from March began to cool the property market.

The summary in my column is: first, smash all hot casinos; second, prevent hot money from colluding and alliances.

(clean up P2P, private fund retail, fund subsidiary, etc.)

It is wise to "lie down in advance" on asset prices, because our bubble is more serious.

Now, there is only a significant overvaluation of the RMB exchange rate (if the exchange rate is down, the housing bubble will automatically decrease), so it is rational to let the RMB depreciate properly.

It is estimated that the yuan will depreciate to 6.8:1 at least until the end of the year, even to 7:1. In the long run, there will be more devaluation.

Yu Yongding, an adviser to the Central Bank of China, suggested that China should allow the renminbi to fluctuate within a larger range against a basket of currencies, at least 20%.

If it is 20%, then the exchange rate with the US dollar will exceed 7.8:1..

Therefore, the volatility of A shares will also increase, which is likely to create a recent low.

In this regard, we must be mentally prepared.