2024 IN & Central Banks OUT

The central banks are assigned a couple of duties to have a control over the fiat money that they can print / issue. Most of them are responsible for adjusting a sustainable inflation rate ( which is ideally around 2% - 3% around the world) and control the unemployment rates like the FED cares about.

Managing a central bank is a hard hustle as the economy is vulnerable to the global and local risks that can directly affect the investment decisions or investment reflexes in a short time. Besides, the balance between growth, monetary supply, unemployment rate, and interest rates might be one of the most difficult tasks to be accomplished.

For several months, the dominance of the policies of central banks affected the crypto and stock markets deeply. As the central banks started to offer risk - free 5% interest rates or the government bonds reached the same levels, the liquidity in the markets drained over time.

FED to Cut Interest Rates

It may sound like interest rates do not have any side impact on the economies but it is actually an illusion that many investors do not even realize.

When the central banks sell their fiat money with several attractive offers, they are only able to save the short term. As the number of buyers and the amount of money grow, this can turn into a huge problem to cover the interest payments and support the economy without printing tons of money again.

Due to the shrinking growth in the trades, there are a lot of companies that try to survive by paying their debt with higher funding rates and sustaining their operations in a condition that the demands drastically drop.

"Seventeen officials predict a rate cut next year, with five officials seeing a decrease of more than 0.75% while just two see no cut. No officials see rates ticking higher in 2024. This month's expectations for rates next year were also less widely distributed compared to September's projections."

Finance Yahoo

The dot plot forecast signals by the officials of the FED show that there is an expectation of interest rate cuts between 0.5% - 1% for 2024. As it is mentioned by Finance Yahoo analysts, the officials do not assume a case that will force the FED to raise the interest rates at the levels of 2023.

Demand on the Assets

The interest rate cut will also mean that there will be less demand for fiat money's 100% seccure (!) investment offer and the money will start to flow into the markets to buy assets that do not bear inflation and have a limited supply.

As you can understand from the initial reaction in the price of Bitcoin and Gold, people will come with a bunch of money to buy your precious Gold, Silver, Oil, Bitcoin and other digital assets and commodities with the expectation of selling them at higher prices. This is going to be the time when the early investors who took the risk of alternative cost (by not accepting interest rates and putting the money in markets) to make better returns on their investments.

Though it may sound like a possibility that may not come true, the central banks are also running out of time and resources to keep the interest rates steady. Thus, the index levels of fiat money, such as DXY and the parities of others, will slowly go down while the prices of hard assets start to rise.

What is your projection for the interest rates around the world?
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Posted Using InLeo Alpha