Recently, the monetary policies of many countries around the world have changed.
The Federal Reserve, European Central Bank, and Bank of Japan are all planning or have announced interest rate hikes, and the global monetary policy easing situation seems to be reversing.
However, as the geopolitical situation in the Middle East eases, the fall in oil prices has become a major variable affecting the global inflation situation.
So, after oil prices fall, will countries suspend interest rate increases?
Do precious metals such as gold still have investment value under the current situation?
Fed Chairman Warsh, who has high hopes of cutting interest rates from the US President, made the latest remarks that surprised the market.
He said that the Federal Reserve will raise interest rates before October this year, with a 100% probability of raising interest rates during the year, and it is expected to raise interest rates twice before the first quarter of next year.
Prior to this, the Bank of Japan announced on June 16 that it would raise the policy interest rate from 0.75% to 1.0%.
This is the first time the Bank of Japan has raised interest rates since December last year, bringing Japan’s policy interest rate to its highest level in 31 years.
Earlier, on June 11, the European Central Bank decided to raise three key interest rates by 25 basis points. This was the first time the European Central Bank raised interest rates since September 2023.
In addition, although the central banks of Australia, Canada, Sweden and other countries are “on hold” this month, they have also expressed the possibility of continuing to raise interest rates.
From this point of view, the situation of global monetary policy easing seems to be reversing.
However, recently, international oil prices have fallen sharply amid fluctuations, becoming a new variable in the decision-making of central banks of various countries.
As we all know, rising oil prices are one of the main factors exacerbating this round of inflation in various countries. So with oil prices falling from highs, is it no longer necessary to raise interest rates?
In this regard, Ma Tianping, a special researcher at the Financial Security Center of Tsinghua University PBC School of Finance, believes that currently, the main driving forces of the global economy have undergone major changes, and countries will most likely continue to raise interest rates.
Ma Tianping said: “We are now an electricity-driven economy, which is neither petrochemical nor petroleum energy fuel-driven economy. New energy batteries, electric energy, lithium, photovoltaics and AI computing power are not obtained by burning oil, and oil prices affect
The impact is not that big.
Therefore, the probability that oil prices will fall enough to prevent countries from raising interest rates is low.”
On the issue of whether to raise interest rates, in addition to Japan and other countries that have to focus on maintaining the stability of their own currencies, central banks of various countries still have to look at inflation data.
Currently, the inflation levels of major economies such as the United States, the European Union, and the United Kingdom are significantly higher than their respective targets.
The actual experience is even more obvious. Taking the United States as an example, a fast food meal that used to cost a few dollars now costs more than ten dollars or even dozens of dollars.
Liu Ying, a researcher at the Chongyang Institute for Financial Studies at Renmin University of China, believes that overall, the monetary policies of many countries around the world have reached an inflection point from loosening to tightening.
Liu Ying said: “In general, the decline in oil prices has indeed reduced the urgency of central banks in various countries to continue to aggressively raise interest rates, but the responses of different central banks will diverge. The decline in oil prices will make central banks in various countries raise less, increase later, and wait longer, but it will not automatically end the cycle of raising interest rates. I think the turning point of monetary policy has arrived after all.”
How will China’s domestic monetary policy respond to overseas market interest rate hikes?
Experts point out that if the Federal Reserve and the European Central Bank raise interest rates multiple times, the US dollar and the euro will have appreciation pressure against the RMB, which will be conducive to the further growth of my country’s foreign trade exports.
At the same time, the widening interest rate differential between China and foreign financial markets will also increase the pressure on capital outflows.
However, Liu Ying said that domestic monetary policy should not simply follow Europe, the United States and Japan in raising interest rates.
Liu Ying said: “The current inflation cycle and economic cycle in China and Europe, the United States and Japan, including the real estate credit cycle, are different, so when the outside world enters the stage of raising interest rates or high interest rates, it does not mean that China will also turn to tightening. In terms of direction, we must adhere to moderate easing and should not follow external interest rate hikes; in terms of rhythm, we must avoid flooding and adopt more small-step, layered and precise easing measures.”
In the context of rising interest rates in many countries, the trend of gold prices has attracted particular attention.
Since March this year, international gold prices have fluctuated downwards, erasing all gains this year.
In interviews with reporters, many experts were optimistic about the mid- to long-term trend of gold prices.
Liu Ying analyzed that in the short term, the downward pressure on gold prices has not been completely relieved, but in the medium and long term, global debt remains high, US dollar credit continues to fluctuate, geopolitical uncertainty and the diversification of central bank reserves continue, so gold still has allocation value.
Ma Tianping predicts that gold will still have investment value in the next two to three years.
“The interest rate market is rising. As a ‘bond’ with 0 interest rates, gold’s ‘charm’ is relatively declining. However, global currency over-issuance exists after all, so under the balance between the two, it is still okay for gold to extend to a long period, such as two or three years.” Ma Tianping said.
However, some people pointed out that the gold market has now entered a “technical bear market”, speculative funds are rapidly withdrawing, and there is the possibility of a deep price correction in the future.
