The outcomes of the ECB and the Bank of England's meeting on interest rates are in full agreement with market expectations. The European Central Bank announced a 25 basis point rate cut, and the Bank of England reinjected 50 billion pounds to expand the asset purchase program to 375 billion pounds. Somewhat surprisingly, the People’s Bank of China also chose to announce a rate cut this time. The loosening of the three central banks in the world has led to many concerns about the global economic outlook, and the loosening of policy has shown a counterproductive side. After the news was released, European stocks and US stocks all fell across the board, and the commodity market was under pressure. Subsequently, although the decline of each index has narrowed, but the market's huge shock still reflects investors' new concerns about the economic outlook. At the close, the US Dow Jones Industrial Average fell slightly by 0.36%, while the German DAX and France's CAC40 fell by 0.45% and 1.17%, respectively. Commodity market performance was also sluggish, with many futures, including crude oil, gold and base metals, falling slightly. At present, the market panic is more based on the fact that the global economy is showing a weaker trend, while monetary policy has almost no room for display. In the United States, for example, employment data has deteriorated month by month since the second quarter. Although the unemployment rate has not risen significantly, it is more due to the lower labor participation rate than the actual employment situation. After the warm winter effect “falling tideâ€, the trend of slow employment growth in the United States began to emerge. At this time, the third round of quantitative easing policy that the radical market participants hoped for failed to come, and replaced it with a “reversal operationâ€. It is expected that the Fed will have no further incremental easing before the end of the year, but the "fiscal cliff" triggered by the political struggle between the two parties is approaching step by step. Therefore, the US growth in the second half of the year is not optimistic. Looking at Europe, its economic situation has worsened than the United States. The unemployment rate in the euro zone has risen sharply. In May, it has reached a historical high of 11.1%. The unemployment rate in Spain, Greece and other countries even exceeds 20%. Forward-looking indicators, including the Purchasing Managers' Index and the willingness to recruit companies, have also continued to shrink, indicating a sluggish willingness to hire in the employment market. At the same time, the sovereign debt crisis and banking crisis that plagued Europe did not find a solution from the mechanism. Although the policy environment has improved recently, it is still far from the end. What is placed before the European countries is a difficult road of competitive restructuring and “deep de-leveragingâ€, and now it is not over half. Another important reason for the decline in European stocks is that despite the European Central Bank’s interest rate cut, ECB President Mario Draghi has not given further policy easing hints, such as the economic downside risks and weakened inflationary pressures, which have failed to stimulate the market. Nerve, and its blunt "no discussion of non-standardized measures" also disappointed the market. In emerging economies, including China, the recent signs of weakness in the economy have become another straw that overwhelm the market. At present, many international institutions, including the International Monetary Fund and the World Bank, still believe that emerging economies will play a “buffer†role in the global economic downturn, but many of the data released recently are quite disturbing. The Chinese central bank cut interest rates twice in a month, which is enough to illustrate the severity and complexity of the current economic situation, which is interpreted by investors as a signal of more risks.
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