We can clearly feel that the stage of rapid economic development has long passed, and it is still a trend of anti-globalization and the external environment is also very poor.

no one has mentioned inflation, but everyone is worried about deflation.

So the interest rate cuts again and again are mainly to prevent the economy from falling into deflation and force the money to the real economy.

first, support the real economy

from the overall general trend, with the slowdown of economic growth, low interest rates are an inevitable trend. Because the interest rate level is closely related to the speed of economic development, under the global economic slowdown, various investment returns also decrease, driving the interest rate level down.

as a country's economy grows bigger and bigger, the growth rate will be lower and lower, just like driving, it will accelerate quickly at first, and then it will slow down later, because the speed is high enough. The same is true of economic development. The GDP is getting bigger and bigger, so the growth rate of GDP will be lower and lower.

In the past, we had a double-digit growth rate, but later it became 8%. This year's target is 5%, which really proves that the GDP growth rate will be slower and slower.

So it will bring a problem. It is getting harder and harder to earn money. Rich people and rich enterprises are increasingly reluctant to borrow money for production. Just like now, many people save money instead of borrowing money, and even have to repay the loan in advance.

Interest rate is the cost for banks to borrow money from ordinary people. After the deposit interest rate is lowered, banks can get money at a lower cost, which can better support the development of small and medium-sized enterprises and restore the real economy.

then, in order to stimulate economic development, the loan interest rate must be lowered, and the cost of borrowing money for production is low, so enterprises will be willing to develop production.

2. Stimulating residents' consumption

As a big savings country, everyone likes to save money, especially during the epidemic, China's savings amount exceeded 43 trillion yuan for three consecutive months, making it the country with the largest savings amount in the world. This is not a big problem for individuals, but the problem is that everyone is holding their wallets, and their willingness to consume is reduced. As one of the three major driving forces to promote economic growth, economic development will not be optimistic without sufficient consumption as a support.

what should I do? Cut interest rates!

Therefore, many policies are saying that promoting consumption and investment will not only issue coupons, but also regulate people's willingness to deposit by adjusting the deposit interest rate, and encourage them to spend. Only after spending well will the whole economy go up.

lowering the deposit interest rate will reduce the willingness to deposit and take money out for consumption; More importantly, if the cost of capital is reduced, entities can get money at a lower cost, and the economy will regain its vitality.

the increase of hot money in the market after the bank cuts interest rates will stimulate domestic demand, which will inevitably lead to the increase of jobs. Therefore, it is not a bad thing for ordinary people to cut interest rates. In some developed countries, the interest rate of bank deposits is very low most of the time, and some even have negative interest rates. For example, in Japan, the same 1, yuan is deposited in the bank, and only 99,9 yuan can be withdrawn after one year. Not only is there no interest, but money is also returned to the bank. This is the negative interest rate.