In the past, as globalization has evolved to the current situation, even the dollar tide has begun to fail, it is necessary to question whether the Federal Reserve's interest rate hikes and cuts can still play the role of an invincible conductor as in the past.

Not long ago, Canada could not hold on and had to cut interest rates, followed by the European Union, which also had to cut interest rates.

What does this move mean, and what impact will it have on the dollar's interest rate cuts?

It is worth discussing in this new phase.

Today, let's briefly discuss this issue.

On June 6th, the European Central Bank held a monetary policy meeting and decided to cut interest rates by 25 basis points after maintaining high interest rates for 22 consecutive months.

The main refinancing rate was reduced to 4.25%, the marginal lending rate to 4.5%, and the deposit facility rate to 3.75%.

Just one day earlier, on June 5th, the Bank of Canada also announced a cut in the benchmark interest rate by 25 basis points, from 5% to 4.75%.

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This is the first interest rate cut by the Bank of Canada since March 2020 and is also the first country among the G7 in the pandemic era to cut interest rates.

It is believed that with these two economies cutting interest rates one after another, a wave of interest rate cuts not led by the Federal Reserve is about to start globally.

For example, many analysts have begun to predict that at the subsequent interest rate meetings of the Bank of England, the UK is also likely to start cutting interest rates.

This was difficult to imagine in the past.

It should be noted that whether global central banks raise or cut interest rates in the past, it is hard to say that they are independent economic policies, because whether they adjust interest rates, the premise must be what the Federal Reserve has done.

Especially in the past dollar tide, the US interest rate hike almost inevitably forced global central banks to follow suit, otherwise their own capital outflow would be fatal.

This is a kind of interest rate hike in a big escape, if their own interest rate hike does not work, their own capital flows out crazily, then they will become the ghost under the dollar tide, become the chives under the American sickle, which is very obvious in the past dollar tide.

And once the United States starts to cut interest rates, almost all central banks must cut interest rates, regardless of whether they are willing or not, to meet the surging flood, so as not to be overwhelmed by these capital inflows far beyond their own bearing capacity to earn interest rate differences.

So it is not difficult to see that in the past dollar tide, central banks of various countries had to follow the conductor of the Federal Reserve.

But this time, the Federal Reserve is still letting the wind blow, still pulling with its own financial strategy, still acting with various aspects of the market, its allies can't hold on to cut interest rates.

This is a relatively abnormal move, and what is even more abnormal is that in the current era when the United States is concentrating all its efforts, pulling together, bringing all its allies, saying it is to contain China's development, saying it is not good to start a new cold war, its allies actually do not listen to its interest rate hike and cut conductor, actually act alone, this is very revealing.

However, to understand this behavior, we may need to start from the current situation of the European Union.

First, we need to understand that the inflation of the European Union has not been suppressed at all.

Although we all know that suppressing inflation is just a temporary statement, or one of the purposes of raising interest rates, but this data is after all on the surface, if this data is not controlled and its own interest rate cut, then there is a suspicion of its own face, the previous performance of the play has been a bit of a waste of feeling.

On May 31, the preliminary data released by the European Union's statistical office showed that the inflation rate in the euro area in May was 2.6%, higher than the 2.4% in April.

Among them, service fees rose by 4.1%, food and tobacco rose by 2.6%, industrial goods and energy rose very little, only 0.8% and 0.3% respectively.

The core inflation rate after excluding these is 2.9%.

Then the inflation rates of Germany and France, which lead the European Union's economy, are 2.8% and 2.7% respectively.

It can be said that there is no sign of being able to suppress it.

In this situation, the European Union actually has no basis for interest rate cuts, because inflation has not been controlled.

So, in order to make the interest rate cut reasonable, the European Union has also made a long-term forecast, saying that the inflation rate in 24 years will be 2.5%, and the inflation rate will drop to 2.2% in 25 years, and it will become 1.9% in 26 years, and will remain unchanged thereafter.

Regardless of how the data is derived, at least the reason is found, so the European Union resolutely walked in front of the United States, and took the lead in cutting interest rates by 25 basis points.

Recall that when the euro was just launched, the economic total of the European Union was over the United States.

Then a Kosovo war dragged the European Union into the abyss.

By 2008, when the United States created an unprecedented financial crisis, the GDP scale of the European Union and the United States was already on par, but this crisis was not only China bore the cost, but the European Union was actually the most injured one.

After that, the United States grew rapidly by various means of cost transfer and dollar harvesting, and the total economic volume of the United States has increased by 82%, while the euro area that bore everything only obtained a 6% increase in economic total.

It can be said that in the process of the United States transferring the cost and risk of the financial crisis, the world seems to be developing vigorously, but the economy of the euro area is stagnant.

Now according to GDP, the economic scale of the United States is 8.6 trillion US dollars larger than that of the European Union, and if calculated according to per capita GDP, the economic situation of the United States has reached more than twice that of the European Union.

Even if you only look at the paper statistics now, the economic situation of the United States is good, the unemployment rate has reached a historical low, and the control of inflation seems to be so.

And the economic locomotive of the European Union, Germany, is already in a state of recession, not only inflation remains high, Germany's comprehensive PMI index has been in a contraction range for 9 consecutive months, and the latest data is also far below the 50-point line of prosperity and decline; France is also in trouble.

Of course, corresponding to these recessions, the pressure of life for Europeans is still relatively lower than that of Americans, and work and life are still relatively relaxed, although it is now very limited, but it can be used to compare parallel on the Chinese Internet to reflect the superiority of the European Union.

But the actual situation is that the proportion of public investment in the euro area in GDP is lower than that of any other developed economy.

The support that vulnerable groups receive from the government during economic difficulties is gradually decreasing, and the instability on the social front has gradually emerged.

If Europe maintains its current development momentum and public investment, then like the United States, the paper data and the Chinese Internet are peaceful and the economy is developing vigorously, but in fact, the situation in Downtown is full of homeless people, which is not surprising.

On the other hand, the private consumption of the European Union has been declining since 2008, and now it has reached the historical low.

It also means that people in the European Union are more and more afraid to spend money, which is very consistent with the current economic situation and inflation situation of the European Union.

Wages do not rise and prices rise, so they naturally dare not spend money.

Even the former president of the European Central Bank, Draghi, frankly said that in terms of digitalization and green transformation, the European Union needs to increase public and private investment by 500 billion euros a year to keep up with the pace of the world.

Of course, it is mainly about the pace of China and the United States.

In terms of industry, the European Union is even more difficult.

In the 1990s, the European Union produced 44% of the world's semiconductors, but now it is only 9%, the United States produced 12%, and China's production has exceeded 15%.

New energy, artificial intelligence, digital technology and other industries that have a stronger driving effect on the economy are gradually leaving the European Union.

Especially after the Russia-Ukraine conflict, the industrial outflow of the European Union is more obvious.

It's okay for the industry to leave the European Union, but the R&D investment of European companies themselves is becoming more and more weak.

According to McKinsey's research, between 2014 and 2019, European companies' R&D expenditure decreased by 40%, which also led to the average growth rate of these companies being 40% slower than their American counterparts.

Faced with this situation, the European Union wanted to make some articles on new energy before.

But when the European Union proposed new energy, green technology and green economy, the investment in these aspects is embarrassing as mentioned earlier, there is a feeling of shouting loudly, but when you take out your wallet, there are only two steel coins.

This makes the European Union's green proposition become an ideological and political show like the environmental girl, rather than a feasible economic route.

On the contrary, China has taken this technical route and economic route to the end, and in the end, the European Union found that what it had been shouting for a long time was actually realized by China, so it had to make a very embarrassing retreat and give up on carbon neutrality.

Objectively speaking, this behavior is really very clown.

If you consider the aging population of the euro area and the inability to reduce social welfare, the distribution problem and class solidification and other issues that have been difficult for a long time, as well as the Russia-Ukraine conflict and the United States initiating a new cold war and other factors, the European Union, which once relied heavily on cheap energy from Russia and cheap industrial products from China, has a very reasonable performance.

If the European Union still follows its so-called allies, the actual boss, to maintain high interest rates in this typical recession, then a lot of money will stay in the financial system to make money because of high interest rates, and it faces a high cost of funds when it wants to use financial means to support its own industry.

But if it doesn't spend money to maintain the economy and develop industries at this time, it may fall into a deeper and more serious recession.Here is the translation of the provided text into English: In fact, a lesson was learned back in 2008.

At that time, the European Union adopted a contractionary monetary policy opposite to the United States' quantitative easing, which became one of the reasons for the current gap between the EU and the US.

Of course, all these macro decisions have their micro foundations.

This micro foundation is that the lives of European people are becoming increasingly difficult.

As a politically fragmented economic union, each country, though small, has the same political demand, which is to maintain the stability of their rule.

It is clear that the current recession is not conducive to this, so how to make the increasingly difficult lives of European people still vote for themselves has become a consensus among countries.

Under this consensus, the EU's behavior of going against its ancestral teachings and taking the lead in lowering interest rates seems very understandable.

After all, not listening to the words of the American big brother now may be settled later, but if there is no action soon, there may not even be a chance to be settled.

Canada is actually in a similar situation to the EU.

As someone who returned from Toronto in October last year, I am very clear about the abyss Canada is about to slide into, so I also understand why Canada will lower interest rates earlier than the United States.

After all, it is really unbearable, and if it continues to endure, it is not just the problem of frequent robberies, an increase in violent crimes, and protests every three or five days, and other social unrest.

From the actions of Canada and the EU, we can also see how fragile and loose the ideological alliance that the United States has set up for the new cold war is in the face of reality and personal interests.

And this is actually the key to cracking the new cold war of the United States in international affairs.

The reason is also very simple.

Looking around the world, there are still industries at the base and real development, and the ability to drive the development of other economies, which is China.

And who doesn't want to develop and make money?

So how to bypass the confrontation of ideology, start from the perspective of actual interests, and cooperate with other economies to develop together is China's most unique competitiveness.

From this point of view, the United States, which only commands allies, suppresses companions, and sucks "friends", is completely uncompetitive.

Before the United States lowers interest rates, there are actually many economies that have taken the lead in lowering interest rates and have a lot of demand for funds.

As an economy with relatively excessive financial capital, China can take advantage of the United States not lowering interest rates to reach a certain level of cooperation with the economies that have taken the lead in lowering interest rates, develop together, and also deal with the destructive flood irrigation brought about by the United States lowering interest rates later.

As for how these things will evolve and change, let's wait and see.