The impact of the epidemic black swan incident on the global economy is far greater than our imagination.

At around 23: 00 Beijing time on March 3rd, the Federal Reserve announced that it would cut interest rates by 50 basis points, and the interest rate of the Federal Reserve Fund dropped from 1.5%- 1.75% to1%-/.25%. This is the first time that the Federal Reserve cut interest rates in 2020, and it is also the biggest rate cut since 2008.

According to the Fed, the fundamentals of the US economy are still strong, but novel coronavirus has brought evolving risks to economic activities. In view of these risks, in order to support the realization of its maximum employment and price stability goals, it is decided to cut interest rates.

In addition, the Fed's interest rate cut also has the consideration of stabilizing financial market expectations. Just a week ago, the three major stock indexes in the United States fell rapidly from a high level, and the cumulative decline of the S&P 500 once exceeded 12%. After the Federal Reserve announced a rate cut, the US stock index rose by about two points, and then plunged sharply, maintaining a downward trend of shock.

Some financial analysts said that a sudden rate cut of 50 basis points often occurred in the context of the economic crisis. The unconventional operation of the Federal Reserve made investors smell the coming crisis, so the stock market suffered heavy losses.

A wave of interest rate cuts led by the Federal Reserve

Every move of the Fed is closely watched by everyone, and there is even a saying that the Fed is "the central bank of the central bank". The mainstream voice believes that a global interest rate cut storm is brewing.

Just a few hours ago, the finance ministers and central bank governors of the Group of Seven developed economies issued a statement. They are paying close attention to the spread of COVID-19 and its impact on the market and economic situation.

The G-7 stated its commitment to use all appropriate policy tools to achieve strong and sustainable growth and prevent downside risks. In addition to strengthening the expansion of medical services, G-7 finance ministers are also prepared to take actions, including fiscal measures as appropriate, to help deal with the virus and support the economy at this stage. The G7 central banks will continue to perform their duties to support price stability and economic growth, while maintaining the flexibility of the financial system.

On March 3, the central banks of the two countries cut interest rates simultaneously. The Australian Federal Reserve announced that it would cut the cash interest rate in March by 25 basis points to 0.5% to cope with the impact of the COVID-19 epidemic. Malaysia's central bank announced that it would cut the overnight policy interest rate by 25 basis points to 2.5%, and said that the COVID-19 epidemic would mainly affect the country's economy through tourism and manufacturing in the first quarter.

"After the Federal Reserve, the central banks of Canada, Britain, New Zealand, Norway, India and South Korea will follow the Fed to cut interest rates by the same amount. At the same time, the European Central Bank and the Swiss National Bank, which have already implemented negative interest rates, will further cut interest rates and cut negative interest rates by about 10 basis points. " Dennis Huang, president of Huisheng International Finance, told China Real Estate News that there is not much room for interest rate cuts by either the Australian central bank or the European Central Bank. The interest rate of Australia's central bank has dropped to 0. 5%, the room for further interest rate cuts is extremely limited. China still has some room to cut interest rates.

Whether the Fed's interest rate cut is a short-term behavior or will continue, the market still has doubts. In the statement of the meeting, the Fed reiterated that "the US economy is still strong" and will pay close attention to "the evolution of the impact of the epidemic on the economy" in the future. Dennis Huang believes that this description leaves room for further interest rate cuts in the future, and the market expects to cut interest rates at least once this year.

Wen Bin, chief researcher of China Minsheng Bank, said that the market expects the Fed to cut interest rates in April, which will further push the central banks of other economies to cut interest rates.

What does this mean for China's currency and property market?

Bank of China has not followed up for the time being. Prior to this, the Federal Reserve cut interest rates three times in 20 19, and the Bank of China did not follow up urgently.

On March 4th, the central bank announced that the total amount of liquidity in the banking system was at a reasonable and sufficient level, and it would not conduct reverse repurchase operations. This is the first consecutive day 12 that the central bank has not conducted reverse repurchase operations.

Regarding "whether China will cut interest rates further", Pan, deputy governor of Bank of China, responded on February 7 that the impact of the epidemic on China's economy is phased and temporary, which may cause disturbance to economic activities in the first quarter, but China's economy will quickly stabilize and make a compensatory recovery after the epidemic is alleviated. China has ample room for monetary policy regulation, and the central bank is carefully analyzing and evaluating the impact of the epidemic on the economy, and making good policy reserves.

In fact, the Bank of China has taken the lead in short-term liquidity. In response to the epidemic, the Bank of China has introduced many policies and measures in terms of liquidity supply and interest rate reduction. "What we have to do now is to put the policy in place and observe the effect of the policy. After the data comes out in March, we will evaluate whether we can complete the overall goal for the whole year and then decide whether to cut interest rates. " Wu Chaoming, chief economist of fortune securities, said.

"The intensification of global interest rate cuts is conducive to the further opening of domestic policy easing space. At this stage, China's monetary policy is more restrained, the overall valuation of A shares is still low, and global asset allocation is expected to further tilt toward China. " Tan, head of the strategy group of Guangdong Securities Research Institute, said that the interest rate cut will ease the financing cost and financial pressure of capital-intensive cycle, manufacturing and other industries. The demand side of the real estate industry is also very sensitive to interest rates. Recently, many central ministries and commissions have successively issued policies to speed up the construction of major projects, encourage new investment projects to be orderly, and the steady growth of infrastructure is still one of the main means to hedge the decline in investment this year.

There is no doubt that the Fed's interest rate cut will bring liquidity to the world, which will help ease the market liquidity tension in the short term. This is obviously beneficial to the overseas financing of Chinese real estate enterprises, and its overseas financing cost is also expected to be reduced.

The data shows that short-term overseas bond issuance by China real estate enterprises is accelerating. 1-In February, the financing amount of overseas bonds, credit bonds and asset securitization of housing enterprises was 2.710.34 billion yuan, a slight decrease of 5.7% year-on-year. Among them,1-February overseas debt financing1540.9 billion yuan, up 3.9% year-on-year, and the scale continues to increase.

It is too early to judge whether foreign capital will return to China after the US dollar cuts interest rates. With the arrival of interest rate cuts, currency inflation is also a problem that has to be considered.

"Foreign capital will not flow into China because of higher or lower interest rates. Now foreign investors are worried about foreign exchange control and the potential RMB depreciation or real purchasing power depreciation caused by domestic inflation. The biggest difficulty facing domestic housing enterprises now is not the problem of high and low financing costs, but the uncertainty of the operating conditions of housing enterprises in the future under the influence of the epidemic and the complex economic environment. " Dennis Huang said.